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More and more institutions are trying to make it harder for you to move
your money into cash.
Globally, over $5 trillion in debt currently have negative yields in nominal
terms, meaning the bond literally has a negative yield when it
trades. In the simplest of terms this means that investors are PAYING to own
these bonds.
Bonds are not unique in this regard. Switzerland, Denmark and other
countries are now charging deposits at their banks. In France and Italy, you
are not allowed to make cash transactions above €1,000.
This sounds laughable to most people, but it is a reality in Europe… and
in the US, in some regions. Louisiana has made it illegal to purchase second hand
goods using cash.
This is just the beginning. The War on Cash will be spreading
in the coming weeks.
The reasoning is simple. Most large financial entities are insolvent. As a
result, if a significant amount of digital money is converted into actual physical
cash, the firm would very quickly implode.
This is precisely what happened in 2008…
When the 2008 Crisis hit, one of the biggest problems for the Central
Banks was to stop investors from fleeing digital wealth for the comfort of
physical cash. Indeed, the actual “thing” that almost caused the financial
system to collapse was when depositors attempted to pull $500 billion out of
money market funds.
A money market fund takes investors’ cash and plunks it into short-term
highly liquid debt and credit securities. These funds are meant to offer
investors a return on their cash, while being extremely liquid (meaning
investors can pull their money at any time).
This works great in theory… but when $500 billion in money was being
pulled (roughly 24% of the entire market) in the span of four weeks, the
truth of the financial system was quickly laid bare: that digital
money is not in fact safe.
To use a metaphor, when the money market fund and commercial paper markets
collapsed, the oil that kept the financial system working dried up. Almost
immediately, the gears of the system began to grind to a halt.
When all of this happened, the global Central Banks realized that their
worst nightmare could in fact become a reality: that if a significant
percentage of investors/ depositors ever tried to convert their “wealth” into
cash (particularly physical cash) the whole system would implode.
None of these issues have been resolved. The big banks remain as leveraged
as ever and at risk of implosion should a significant percentage of capital
get pulled into physical cash.
European banks as a whole are leveraged at 26 to 1. In simple terms, this
means they have just €1 in capital for every €26 in assets (bought via
borrowed money).
This is why whenever things get messy in Europe, the ECB and EU begin
implementing capital controls.
Consider what recently happened in Greece. Depositors began to flee the
banks in droves, so they declared a bank holiday. This holiday included safe
deposit boxes… so all the bullion or physical cash Greeks had stashed there
remained locked up… just like the “digital” money in their savings accounts.
Again, it was impossible to get cash out of the banks… even cash that
technically wasn’t “in the system” anymore but sitting in safe deposit banks.
The US financial system isn’t any better. Indeed, the vast majority of it
is in digital money. Actual currency is just a little over $1.36 trillion.
Bank accounts are $10 trillion. Stocks are $20 trillion and Bonds are $38
trillion.
And at the top of the heap are the derivatives markets, which are over
$220 TRILLION.
If you think the banks aren’t terrified of what this market could do to
them, consider that JP Morgan managed to get Congress to put the US taxpayer
on the hook for it derivatives trades.
Mind you, this is the same bank that is now refusing to let
clients store cash in safe deposit boxes.
This is just the tip of the iceberg. As anyone can tell you, it’s all but
impossible to move large amounts of money into cash in the US. Even the large
banks will routinely ask you for 24 hours notice if you need $10,000 or more
in cash. These are banks will TRLLLIONS of dollars worth of assets on their
books.
This is just the beginning.
Indeed, we've uncovered a secret document outlining how the Fed plans to
incinerate savings.
We detail this paper and outline three investment strategies you
can implement
right now to protect your capital from the Fed's sinister plan in our
Special Report
Survive the Fed's War on Cash.
We are making 1,000 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
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