Not that it will happen over the next 10 days but I wondered what would happen if the Treasury “really” couldn’t borrow any more money? Magically Zero Hedge put out an article yesterday that illustrates the immediate effects. Between Oct. 18th and Nov. 15th the Treasury has $441 billion worth of bonds to “redeem.” We don’t really redeem them, we simply borrow the same amount of funds due (plus interest?) and magically “rollover” the old debt into new debt…and all is well.
I am sure you recall the 1980 movie aptly named “Rollover” where the financial world stood at the abyss and was at the mercy of whether the Saudis would “rollover” their debt. This is exactly where we are today with a small caveat. The caveat being “this is where we were” last year some 18 months ago wondering if the Chinese would continue to purchase our debt. The answer as it turns out was “no,” they stopped making purchases and actually started to liquidate which has caused interest rates to rise.
This brings us to where we are today. The Federal Reserve is THE only buyer able to purchase what is needed to “sell” by the Treasury to raise new debt AND payoff old debt. This is pure and simply an insolvency of the first degree. Just because “we” pretend that it’s not so makes no difference. Just because the global financial system “pretends” that it’s not so makes no difference either. It is what it is and at some point in time as it always happens, “the crowd” (which even includes Americans) will realize this.
Many of you have heard Jim Sinclair’s “GOTS” (get out of the system). If you cannot do this entirely you absolutely MUST do this to some extent for the simple reason of your own survival. When the day comes that we either cannot “rollover” our debt OR the “masses” understand the Ponzi nature and panic…everything will close. So you have $3 million in muni bonds and are comfortable…”you’re all set?” Really? Will the municipality actually pay? Where will you cash your check? Or even deposit it? The majority has not even thought past the first or second “move” to what is coming.
In the event that the Treasury cannot borrow whether it is because of Congressional/Executive office sabre rattling or because the market itself shuts them down, everything will close. “Everything” in this case means EVERYTHING! If you cannot bring yourself to “get out of the system” and if you are willing to do ONLY one thing to help yourself then I would suggest that you buy some silver. Silver is wealth. It will not evaporate or be bailed in. It most probably will not even be considered for confiscation and most importantly “it will spend.” After some very brief period of time, “dollars” won’t spend…silver will.
Eric Sprott and several others have said that silver will be THE best investment of this decade, I don’t doubt them in any way. In fact I agree with them but that is not why you must own silver. As I said above, owning “some” silver means that you have something “outside” of the system that represents wealth AND will spend. If it turns out to be so, that silver is THE best investment of the decade then you made a good investment. If (when) it turns out that the system shuts down and the banks and brokers “bail in” some of your assets, then you will have something that is spendable at the very moment that it’s needed most.
How long could we see a financial system closure? Your guess is as good as mine. Hopefully not long. Some will say “there he goes again fear mongering.” I would remind everyone that the FDIC (also Canada and Europe) have written laws that provide for “bail ins.” Do you really believe that any law is written “not to be used?” This whole thing has been systematically set up, they know that failure is coming and have (are) prepared for it. Without going over the edge here I will ask you one more question, for what possible reason could there be a need for 2 billion rounds of ammunition? “They” know that it’s coming, so do you if you’re willing to admit it to yourself.