A Thank You to Bill Holter for Mention of the Systemic Risk Warnings List

Recently I added a new page on the blog which has a list of all the various systemic risk warnings that have been issued by the IMF and the Bank for International Settlements (BIS) over the past year or so. The response to this new page has been incredible. 

Jim Rickards and Willem Middelkoop were kind to put a link to the page on their twitter feed. Bill Holter just did a full article featuring the warnings list which you can read here (or here on Jim Sinclair's blog site). A big thank you to all of them for mentioning the list.

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The purpose of this blog is to be a free information resource for anyone who can use the information presented here. The blog functions best when it serves readers in that way.

This list can be useful because it documents all the warnings from sources most people accept as credible and illustrates that there is legitimate concern within the system about risks that exist to the entire system.

On the one hand, it does show that the risks are recognized and efforts are being made to mitigate and manage the risks. This is useful to know.

On the other hand, the existence of the risks means that we as average citizens have to take some responsibility to be informed about them and to make some preparations in case the risks ever lead to a systemic crisis.

We are following that here as one of our two big questions for the future. Many highly credible analysts including Jim Rickards, Nomi Prins, Bill Holter and Willem Middlekoop expect a systemic crisis at some point. As we can see from the warnings list, the leading global financial institutions in the world have warned us about the potential as well.

None of us can know the future, but all of us can try to be better informed and have some kind of plan in mind to deal with a crisis if we do get one. There is nothing extreme about this. It's just common sense and is the same concept we use everyday regarding having insurance for our homes, cars, health, etc.

We owe a debt of thanks to those who try to keep us informed and encourage us to be prepared for a crisis. It's not rocket science. Being prepared is better than not being prepared. We will continue to follow it here on the blog to see what actually does happen and do our best to be a useful source of information.
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Added note: 

The link to this new page has been re-tweeted so many times I cannot possibly thank everyone who did so individually. But I do very much appreciate it! The blog Independent Trader also carried an article about it which you can see here (the page has a translation option if you need it).

Other sites that carried it were SGTReport.com , Miles Franklin, and some others. Thank you to all of them!

In case you think not many people have an interest in this topic, the combined efforts of those listed above very quickly generated many thousands of hits to the page of links listing the systemic risk warnings.

People are interested in this and will listen. This list of links can be a useful place for someone new who wants to learn about these issues to get some background. If you see new articles about similar warnings, please let me know. I will keep the list updated and available online.

email:   lonestarwhitehouse@gmail.com

Added breaking news: We do have some interesting breaking news this evening. The IMF announced they are going to delay a decision on adding the Yuan into the SDR currency basket until at least September 2016. Reuters also reported it here. We will do a full blog post on what this may mean in coming days. Here is the relevant Q&A concerning the delay:

IMF Survey: Why is staff proposing an extension of the current SDR basket?

Tiwari: To put this in context, the current SDR basket expires at the end of this year. We are proposing extending the current SDR basket by nine months until September 30, 2016. This is in response to feedback from SDR users on the desirability of avoiding changes in the basket at the end of the calendar year and facilitating continued smooth functioning of SDR-related operations. An extension of nine months would also allow users to adjust to a potential changed basket composition should the Executive Board decide to include the RMB.

The proposed extension, which will be decided by the Executive Board later this month, would not in any way prejudge the timing of conclusion or outcome of the review.

Off Topic: People Band Together when Faced with a Crisis

One of the themes I see out there on the internet while doing research for this blog is that we can expect society to break down into chaos if we are faced with another global financial crisis. The idea is that if there is a huge crisis that causes the banking system to shut down for any period of time, normal distribution channels will break down and basic supplies needed for daily life will be in severe shortage. 

The next assumption is that people will react to this situation by acting only in their own self interest and will do all kinds of horrible things to survive. While we would certainly expect to see some of this going on, let's take a minute to look at the other side of the coin.

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I believe, perhaps naively, that most people do care about other people and in a crisis situation most people will band together to try and lend a hand if they can. While the media tends to focus on the civil disorder that does sometimes break out in crisis conditions, we do need to be reminded now and then that many people act in selfless ways to help others all the time. I present to you this situation that happened recently in Lubbock, Texas as just one example. First, here is the background. It centers around the 9 year old son of a popular tennis coach in Lubbock:

"On Tuesday afternoon, nine-year-old Luke Siegel, son of former Texas Tech men's tennis coach and current Lubbock Cooper Pirate head tennis coach Tim Siegel, was involved in a golf cart accident in Lubbock, Texas that resulted in severe head trauma. The avid sports fan, baseball player and New Orleans Saints' fanatic was rushed to the hospital where he went into cardiac arrest upon arrival. Luke is a fighter - he knows no different - and has continued to show that over the last 48 hours. Doctors are optimistic the Cooper Pirate will return home but not without quite the road to recovery with brain damage, a collapsed lung and complications with his left eye due to the golf cart rolling on top of him causing several skull fractures and brain swelling. It is a waiting game as doctors continue to evaluate the extent of the brain damage and the next several hours will be key for the entire Siegel family, friends and loved ones."

Of course this is a huge crisis for the family involved. Not only do they have to endure the stress of seeing all this happen to their son, the medical costs to deal with this situation are huge. Fortunately, they were not left to face this problem alone. People in Lubbock rallied to lend a hand in a very generous and selfless way.

Here is how the problem was described on a popular message board for football fans of Texas Tech University (located in Lubbock and my alma mater):

"Don't want to post to much but have been at the hospital these last two days and this young man is fighting and continues to fight. He's unfortunately got a long road ahead and his sweet family has had a lot of support at the hospital ... It's been great to see so much support from the Lubbock and Texas Tech community for Luke and the Siegels. 

Luke is still dealing with some swelling on his brain and there is some hope that they'll be able to do some surgery tomorrow or over the weekend. 

If you are in a position to help at all please do ... This little guy deserves it. I posted a link below and as I said, if you are in a position to help it would go a long way."

http://www.gofundme.com/LubbockBacksLuke

Here are some images of people who jumped in to try and help out:

So, how did this turn out? 

The fundraising is still in progress, but so far over 440 people have helped raise over $62,000 in just four days!  You can see the update on the Gofundme page by clicking here.

This is just one example. There are thousands of others out there that show how people will band together to lend a hand in tough times. 

We don't know if we will have to face another major financial crisis some day or not. But if we do, just keep in mind that there are many good people out there who will work on trying to solve whatever problems might arise. There are people who do care. Sometimes I think they get overlooked in the rush to focus on those who prefer to cause problems rather than trying to help solve them.

Update 12-20-15: Luke is slowly but surely making progress and the community helped out with $85,000 in donations so far.

President of the Bundesbank talks about Ideas to Improve Stability in Europe

This speech posted on the website of the Bank for International Settlements is by the head of the German Bundesbank, Dr. Jens Weidmann.  The speech was made in Germany on July 23rd.This is a long speech. Readers are encouraged to read the whole speech if time permits. 

Below I picked out a few paragraphs from the section of this speech that talks about concerns that still exist in the banking system in Europe. You can see clearly that concerns do exist and the there are ideas being discussed on how to deal with them, including how to determine what liabilities are eligible for "bail-in". I put some key points in bold type.

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The banking system

. . . . However, if the abundant injections of central bank money are used not only to bridge temporary liquidity shortfalls but, in extremis, to keep insolvent banks on long-term life support, matters could get tricky.

The more the central bank safeguards banks against risks and promises them central bank funding even in dubious situations, the more incentive they will have to take on excessive risks, of course. Former IMF Chief Economist and current Governor of the Reserve Bank of India, Raghuram Rajan, as well as last year's winner of the Nobel Prize in economic sciences, Jean Tirole, 1 , 2 amongst others, provide evidence in recent studies that the implicit promise of a central bank to step in by lowering interest rates and injecting liquidity when banks default whets banks' appetite for risk.

This also shows that, in this respect too, a balancing act is required when selecting an appropriate strategy for liquidity provision. Being too restrictive in granting liquidity can cause a spark to turn into a fire. Granting liquidity too liberally, on the other hand, and propping up institutions without sustainable business models, may also mean that the water used to extinguish the fire ends up causing more damage than the fire itself.

In the words of the American economist Allan Meltzer: "Capitalism without failure is like religion without sin. It doesn't work." Banks also need to be able to fail - without bringing the entire financial system to its knees. Or put differently: no bank should ever become so entangled in the rest of the financial system that its collapse would pull the whole web apart - banks should not be "too big to fail".

It is clear that the incentive problems I've just described would continue to exist if bail-outs were simply to be transferred from the central bank to fiscal policymakers. An example would be rescuing banks using taxpayers' money even though resolving them would be the wiser course of action.

We cannot have governments providing free insurance, as such an implicit government subsidy makes banks too big and too risky. Systemically important banks, in particular, therefore need to play a role in protecting themselves against default by increasing their equity capital and ensuring a minimum total loss-absorbing capacity (TLAC) for their liabilities.

By having banks bear the costs of their own protection, incentives are set for risk-conscious activities. Banks simultaneously become more resilient, and the contagion effects are reduced should a bank run into difficulties all the same.

We have seen some progress already with regard to equity capital. Basel III significantly strengthened the requirements for both the quantity and the quality of equity capital. However, to date, the binding rules have been based exclusively on risk-weighted capital.

The risk weighting is supposed to prevent banks from investing too heavily in high-risk assets. During the financial crisis, however, we found out the hard way that the risk weighting does not always reflect the actual risk of an investment. Therefore, in my opinion, a capital regime that is also geared to total assets is absolutely necessary. Hence, the leverage ratio is to become part of Pillar 1 of Basel III and thus binding from 2018.

Stricter capital requirements will help to increase the internal capital adequacy of banks. But capital does not come for free. This means that stricter requirements may also reduce the banks' readiness to take on any risks at all; that is, to lend. But that would slow economic momentum. Ultimately, this is also a balancing act.

However, it seems clear that additional efforts to expand banks' capital base would be advisable, especially for systemically important banks and those that will just barely meet the Basel III requirements.

But even stricter capital requirements cannot entirely prevent individual banks from collapsing. And this is okay. After all, the possibility of failure is essential in a market economy.

This is why functioning resolution regimes are crucial for the financial system reform in Europe. With the introduction of the banking union and the adoption of the BRRD and the SRM, important steps have already been taken in the right direction.

However, one critical step is still missing: the establishment of standards for loss-absorbing liabilities, ie debt that can be bailed in. The German government recently submitted a draft act to promote the accumulation of liabilities eligible for bail-in. While this is to be welcomed, more needs to happen.

Although Europe already has a bail-in standard in the form of the minimum requirement for eligible liabilities (MREL), this has so far allowed banks to hold bail-in liabilities of other banks without additional conditions. In a crisis situation, this, of course, increases the risk of contagion. Hence, a bank should, as a minimum, completely back other banks' bail-in-able liabilities with equity capital.

Roadblocks to the SDR Becoming a Global Currency

One of the two big questions we are following here is if the SDR used at the IMF will eventually become a global currency that everyone can use. There has been a lot of buzz about this question ever since a 2009 article by PBOC Governor Zhou Xiaochuan calling for the SDR to become a global reserve currency. It's now six years later with nothing in sight to indicate the SDR will become such a thing. Clearly this kind of change moves very slowly. Let's take a look at some of the reasons why.


This 2010 article in The Federalist Debate can serve as a useful guide for us in answering this question. It was written by Elena Flor of the Intesa Sanpaolo Group from Italy. This article was calling for the world to move forward on the Chinese proposal to make the SDR a global reserve currency. It listed several steps that would have to take place for this to ever happen. This is a long and detailed article, so below we will list those steps with a brief summary for each one. It will serve us well in looking at the roadblocks to the SDR becoming a global currency.

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"What has to be done to effectively use the SDR as a supra-national reserve currency? Which problems remain to be solved?"

1. The composition of the basket of the SDR 

A most important step for the SDR to become a global currency is to determine what the proper composition of the SDR basket of currencies shoud be. This is always a subject of great debate and change takes place very slowly. This fall we find out if the Chinese Yuan (and perhaps other currencies) get added in. Until this is resolved on a more permanent basis, it remains a roadblock to use of the SDR as a global currency. (update 8-8-15: IMF delays decision on adding the yuan into the SDR basket - clear example of how things move slowly) (update 11-30-2015 - the IMF approved inclusion of the Yuan into the SDR currency basket to be implemented in the fall of 2016)

2. Reform of the IMF 

"After years of neglect, the IMF has recently received international support for a revived activity. In line with this idea various suggestions have been put forward in order to strengthen its activities. Also to support the market of the SDRs, a reform of the IMF is needed. This reform would involve the activities to be carried out by the IMF, the funds at its disposal (currently inadequate), governance both in terms of governing bodies and majorities required for its activities to be carried out and of quotas and representation." 

my added comment:

Here we are in 2015 and the proposed 2010 reforms remain in limbo. This speaks volumes about the pace of change and remains another roadblock for the SDR. (update 12-22-2015 - the US Congress approved the 2010 IMF reforms doubling the number of SDR's and giving more voting power to emerging nations)

3. Change and increase in SDR allocations 

There aren't near enough SDR's available for it to be used as a global currency now. There is nothing right now that would suggest a big increase in SDR's is on the horizon. Unless that changes it remains a big roadblock to the SDR. What could speed up the process? A crisis.

4. Issue of SDR denominated securities (Bonds) *** This is a big one

"The issue of SDR denominated securities would be a good starting point to increase the appeal of the SDRs. One can make the hypothesis that initially the IMF itself, some Governments and special international financial institutions such as the World Bank could issue SDR denominated securities, which could then be followed by banks and non-financial firms."

"Among the Governments, the US could provide a good example for other countries: if it agrees that a shift towards a more stable and globally balanced international monetary system is desirable it could issue part of its bonds not only in US dollars but also denominated in SDRs."

The importance of such a step would constitute a good example to be followed by other countries. However, considering the current US resistance to these proposals, it is unlikely that the US opens the market for SDR-denominated securities. The remarks made by the Governor of the People’s Bank of China are supportive of a market for the SDR denominated assets. It has been suggested that therefore they (China) could issue SDR denominated bonds and encourage other G-20 members to follow their example. This would be important because it would foster market liquidity for SDR denominated securities, and it would be more important than buying IMF SDR denominated bonds – which they are already doing – since the IMF bonds cannot be traded according to current rules." 

my added comment:

The article calls for a broad SDR bond market that moves into the private sector. But the article also notes that "considering the current US resistance to these proposals, it is unlikely that the US opens the market for SDR-denominated securities". It then suggests maybe China could give SDR bonds a try. Right now, nothing like this is being proposed so this remains a huge roadblock to the SDR becoming a global currency. But we should keep an eye out to see if the new BRICS Bank (NDB) or the AIIB issue any SDR based bonds. For that matter we should watch to see if anyone anywhere issues any SDR based bonds. (update 1-21-2016 - former IMF head of SDR Division and Chinese co-author Dongsheng Di call for the AIIB to issue SDR bonds) 

5. The set-up of a clearing system 

"The experience with the ecu has clearly shown that the setting up of a clearing system is a crucial point. The establishment of a clearing system for the ecu facilitated its use and the growth of the market, proving to be the best way to build up liquidity. The Bank for International Settlements was called to act as clearing house. Similarly, but considering the different nature of the market of SDRs (public rather than private), it can be said that the setting up of a clearing system for central banks investing in SDRs would constitute a step of great importance."

my added comment:

The article points out that a central global clearinghouse for SDR bonds and securities would be essential. The IMF and/or BIS come to mind for this. Nothing like this exists today, so this is another roadblock for the SDR to overcome.


Conclusion:

This article does a great job of listing the big roadblocks to the SDR becoming a true global currency (let alone a global currency that everyone could use). If all these huge changes have to take place at the existing pace of change, it could easily be well past my lifetime (I'm 59 years old) before the SDR becomes a global currency. Just look at all the problems and delays just trying to get the relatively minor 2010 IMF reforms approved for example.

This is why we note here on the blog that for this kind of change to happen rapidly, there will almost certainly have to be a huge global financial crisis that motivates people to accept major changes more quickly. Changes that would otherwise take years to decades to unfold. Jim Rickards and others are predicting this very thing to happen sometime in the coming months or years (certainly within my expected lifetime). 

This is why we have selected two big questions to follow here on the blog:

1) Will we get another big global financial crisis worse than 2008 as Jim Rickards and others are predicting?

2) Will the SDR used at the IMF eventually become a global currency that everyone can use?

The two questions are connected in that if we get a yes answer to question #1, it could lead much more quickly to a yes answer to question #2. 

If we get a no answer to question #1, the path to SDR use as a global currency probably gets longer and tougher due to all the roadblocks listed above. But it could still happen over a longer time frame. The technology for it to happen already exists today so that is not a roadblock.

We also need to see if the BRICS group is eventually going to be in or out regarding the SDR. For now they are clearly in. But at some point they could decide to go it on their own if nothing changes at the IMF. If they eventually exit the IMF, the SDR is unlikely to become a truly global currency (if more than half the world is not using it).  An exit by the BRICS looks very unlikely right now.

A reader may ask, Why should I care about all this and how will it impact me? 

If the answer is no to both questions above, you probably don't need to care. If the answer to question #1 is no and to question #2 is yes, but over many years, you may not need to care any time soon.

However, if the answer to question #1 is yes, it is obvious that another major global crisis worse than 2008 will directly impact all of us. Stocks, bonds, pension funds, annuities and currencies will all get hit. Safety net programs could be lost. Lots of jobs will disappear. Governments could fall. There could be civil unrest on a global scale. That much is pretty easy to see.

But even if there is no such crisis, if the SDR rises to become a global reserve currency for any reason, the value of the national currency you use could certainly be impacted. Many believe the US dollar would take a substantial devaluation in the process for example. This is why you should care about all this and how it might impact you directly some day. It's why we are following these two big questions here.

Added note (8-4-15): Reuters reports IMF will delay inclusion of the Yuan into the SDR until September 2016. This is what we mean when we say this is a slow process. 

Update: (1-25-2016):  with the inclusion of the Yuan in the SDR currency basket, passage of the 2010 IMF reforms, and the call by former IMF official Warren Coats for the AIIB to issue SDR bonds, a number steps forward have been taken that could lead to broader SDR adoption in the future.

Why Should I Read this Blog Anyway?

Every now and then it's good to ask a question like this. We live in an era where there is somewhat of an information overload. There are more flavors of media available all over the world than ever before. There also is no shortage of experts to provide us their opinions on things and predict what they think will happen.

With all this information and opinion available, a very reasonable question for a reader to ask who happens to land here is :  Why Should I Read this Blog Anyway? 

It's a good question. Let's explore it. Below is a bullet point list for why you should consider reading this blog.

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- the quality and the wide range of information presented here

There are many sources out there that cover the same topic and issues we cover here. There are many very good sources I will add. What I think makes this blog unique is the collection of quality information on a wide range of key issues related to potential monetary system change. The sources used here are easily verifiable for the reader and are recognized credible sources. Links are provided to the reader to be able to verify every source article used on this blog. We present direct links to important articles and speeches from those running the present system (such as the IMF, the BIS, etc). We present the credentials of those we feature who are skeptical of the IMF and Central Banks. We only feature those we feel use credible information sources that readers can easily verify. This is what we mean by the quality of information presented here. 

- a wide variety of credible opinions and views are presented

This blog is not on any kind of agenda so we are free to present a wide variety of views and opinions. We present the views of those who are skeptical of the current monetary system as well as the views of those who are running it. We try to present those views with as little editing or editorial comment as possible. When we do add commentary, we clearly label it as our own separate comments. The goal of this blog is to present quality information to readers from a variety of sources and views. We encourage readers to explore them further and decide for themselves what to believe. We don't don't try to tell them what to believe.

- we are not selling anything here or promoting any product or service

This blog is not designed to try and lead readers into buying any kind of product or service. We have no affiliations of any kind to anyone or any website we cover here. In addition, we are not paid by anyone to write blog posts here. All of the work done to produce the articles on this blog is donated time. The only way an article or opinion makes it on to this blog is if we believe it is quality information that will benefit the reader to consider. Since we are free from outside monetary pressure, that never factors in to any articles or opinions presented here. This is an important factor because obviously sites that are sponsored have an obligation to deliver a product or point of view favorable to the sponsor's interests. That does not mean there is anything wrong with that. It just means you have to factor in that relationship when reading the information presented on such sites and expect some bias. Of course this blog is free and always will be. There is no intent to ever convert to some kind of subscription service.

- this blog has built a very good archive of information over the past year and a half

One of the best features of this blog is the historical archive that has been built. On the right hand side of the blog is an archive of every article that has been posted here. It documents the various warnings that the IMF, the BIS, and others have issued about the global financial system. It documents the opinions of the experts we feature here so that readers can go back and see how accurate their forecasts have been. It also documents the investigative trail we have followed here on the blog to get to the point where we are today. It shows you why we have boiled everything down to two big questions:

1) Will we get another global financial crisis worse than 2008 as predicted by Jim Rickards, Nomi Prins, and others?

2) Will the SDR used at the IMF some day become a type of world currency that everyone can use?

We are convinced that the answers to these two questions will determine if we get major monetary system changes that impact us in our daily lives. Change that doesn't really impact us much is not all that important to cover. Change that can impact our daily lives is important to cover. We try to stay laser focused on that here.

- readers here are getting the benefit of some very high level and informed sources

This is kind of a hidden benefit of this blog. There are readers of this blog who are very informed and have very good sources of information. Some of them are kind to share this even though they prefer to remain anonymous. Readers here of course will recognize Jim Rickards and Nomi Prins since we feature them here extensively. They are very kind to share thoughts by email from time to time. They have also been kind to review articles written here from time to time and offer their insights or suggestions for improvement. They don't tell me what to write, they just generously donate time to look over the article to make sure the facts presented are accurate and that any quotes I use from them are correct. You don't get much better proofreading than that. Readers here get that benefit.

There are other generous high level sources who prefer to remain anonymous who do this same thing on other blog articles from time to time. It improves the quality of the articles and information presented here significantly and readers here get the benefit. I also hope it is some encouragement to readers that I can say without reservation that there are some very good people working inside the system who do care and want to make things work better for the average person. It's hard work, but they are working on it the best they can in a complex system where there are many diverse points of view.

All these sources donate their time and comments for free and it is very much appreciated here. A big thank you is certainly in order! 

Their input is also what has led us to identify the two questions above as the two most important to follow here for the average person. We think the best information sources in the world have pointed us in this direction.

Conclusion: 

The bullet points above are all good reasons to read this blog. The blog can serve you as kind of an executive summary of key issues and events that could some day impact your daily life. There is a ton of good information (and bad information) out there in the world. The difficult part is to sort through the mass of information to try and focus on the most important, the best quality, and the most relevant to the average person. That is what we try to do here for readers even while admitting we can't possibly catch everything.  

In that regard, we also welcome input from readers (from any point of view). Many readers here have provided excellent links to great articles that we would have missed otherwise. The goal here is to serve readers with quality information and focus on the key issues. Hopefully, we are doing that and readers are getting a benefit from it. Email response over time has been positive and indicates the information presented here is helpful to readers.

Off Topic: Solar Technology Moving Forward in Texas?

There is a lot of debate about whether solar power will really play a big role in the future or not. But this Dallas Morning News article suggests that it is moving forward in Texas and likely to gain broader acceptance over the next decade. 

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"In the more than 130 years since Thomas Edison released the electric light bulb on the world, households have more or less gotten electricity one way. Build a power plant, string power lines in all directions until you’ve connected as many homes and businesses as possible, repeat.

But in a nondescript white brick house a few miles outside downtown Houston, there is no need for a distant power plant spinning on a steady burn of coal or maybe radioactive uranium.

One moment the lights and home appliances are humming along like those in any building. Then, for a fraction of a second, the lights dim and the room goes quiet. Joe Coffey, an engineer with NRG Energy who spends his days testing out devices like portable solar panels and water heaters you put on your roof, has cut the house off from the power grid.

Only, the air conditioner is still running, as are the lights. In place of the grid — or the standard gasoline-powered backup generator — is a battery array in the garage and solar panels on the roof. On the patio, where the grill should be, sits what is essentially a 5-foot-tall miniature power plant hooked into the natural gas line.

“A lot of this stuff, it’s going to be years before it can be delivered to customers cost-effectively. But it’s like anything. There’s going to be early adopters, and we want to be ready,” Coffey said."

Click here to read the full Dallas Morning News article

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Nomi Prins Interview: Fed Trapped in Money Printing Policy

This is an excellent recent interview by Greg Hunter with Nomi Prins. The comments by Nomi Prins about her recent invitation to speak at the US Federal Reserve were extremely interesting and informative. She provides some great insight into how she was received at the Fed. Below are a few quotes from the interview summary and the video itself. After that a few added comments.

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"Best-selling author Nomi Prins says the only thing propping up the system is money printing. The tip of the iceberg was the Greek debt crisis. Prins says, “Before it happened, there was a lot of concern at the central bank level. That wasn’t really discussed very much in the press . . . but I believe behind the scenes there were a lot of fearful conversations about the financial system, not just the relationship of the euro and Greece politically, which was a part of it, but you don’t want any chips to fall off your table. Anything could open the door for a run on liquidity (cash), which is also why I talk about what individuals should do more and more now is try to preserve their own liquidity and to take more cash out of the markets or out of banks to just have on the side before this period of volatility, before we have the actual crash. This is a tenuous situation. I am afraid of things that look like a bail-in up to the level of a bail-in.”

Prins, who was a top Wall Street Banker, says the too-big-to-fail banks are much bigger and will be much harder to save in the next crash. The stats Prins comes up with to illustrate this are stunning. Prins says, “43% more deposits are held by the big six banks in the United States since before the crisis (in 2008). 84% more assets are held by the big six banks and 400% more cash. . . . The point is the big six banks control more deposits, more assets, more trading, more cash than they did before. That’s a fact.”

Click here to read the full interview summary

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My added comments:

Readers should pay careful attention to the remarks early in this interview about the reception Nomi got at the US Fed when she made her presentation there recently. Notice that she herself was surprised to be invited to speak. She points out that she told the Fed officials she was opposed to what they have been doing and showed them the slides of her presentation ahead of time. This is important information because it shows that there are people inside the Fed today who take her warnings seriously. If they do, we should too. Kudos to Greg Hunter for providing this interview that gives us insight into some behind the scenes information. This is a very good interview that covers a broad range of important issues. I encourage readers to listen to it.

Added note 8-7-15: Thank you to Silver Doctors for running this article on their site.

News Note for Blog Readers in Europe

I got the following notice from Google regarding their use of cookies on this blog.

"European Union laws require you to give European Union visitors information about cookies used on your blog. In many cases, these laws also require you to obtain consent. 

As a courtesy, we have added a notice on your blog to explain Google's use of certain Blogger and Google cookies, including use of Google Analytics and AdSense cookies." 

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Monthly Repost: Monetary System Change for Dummies

Note: We get new readers here every week. For that reason I will re-post the article below every 1st day of the month so new readers can find it easier. The information in this article should remain pretty relevant all year and gives a full background as to what the purpose of this blog is.

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Monetary System Change for Dummies (originally published 1-1-2015)

Hopefully, readers here have a sense of humor. Of course I am not calling readers here dummies. My email inbox proves we have some highly intelligent and well informed readers here. What this post is about is why the blog got started, what it is trying to do, and how we "monetary system dummies" can make a common sense plan for whatever changes are coming in the future. I classify myself in this same group of monetary system dummies --- the average person who does not spend much time reading IMF workpapers and listening to Bank of International Settlements speakers. Those of us who don't have a background in macro economics, but are willing to learn because we sense it does impact our lives. 

With that in mind, I have linked below a somewhat longer article called 'Monetary System Change for Dummies'. Since it is about 4 pages long, below I have just pasted in a few selected paragraphs to give you a feel for the article. The full article explains why I got interested in this topic, why I started this blog, and offers some common sense ideas on how to prepare for coming changes that most anyone can follow. The full article (click here for it) is written in Word format so you can print it out if you like. It contains a link to the web address for this blog making it easy to print and hand out so people can find the blog on the internet.

A big thank you to all who visited here (over 135,000 visitors from around the world). The blog continues to get new readers all the time. It's designed for the average person who wants to learn about this topic without spending hour upon hour researching and digging up the info (that's my job). Please let others know it is here if you find the information worthwhile.      2015 will be interesting!

Monetary System Change for Dummies

(What I Have Learned from a year of Bogging on this Topic)

A little over 10 years ago I became interested in the “big picture” of the global monetary system and what kind of changes might be coming that could impact my family in our daily lives.  I stumbled onto a web site operated by Jim Sinclair called JS Mineset. I was intrigued because this was a free information source web site that challenged me to learn more about how the monetary system works and how changes to it can impact our daily lives. Jim Sinclair had a lot of credibility because he had decades of experience inside the system and had become somewhat famous for accurately forecasting the gold market. I am old enough to recall the late 1970’s when gold made a then historic move to all time highs. I remember the Hunt Brothers move into the silver market and the accusations that they were attempting to corner the silver market. In fact, I even worked for one of the Hunt family oil and gas companies for 15 years after the silver price collapse that led to Placid Oil filing for bankruptcy protection. (the one owned by their sister Caroline Hunt of hotel fame)

. . . . . . . .

As time went by I began to do more and more research to seek out good sources of information. I realized that having an understanding of the monetary system was important, because how it operates impacted my life and my family. To make good decisions, it is important to understand how things work and to get the best information possible.  I learned that good information is out there if you look for it, but it takes time and effort. There is good information from both mainstream media sources and alternative media sources. In fact, studying both sources is the best way to compare different perspectives and see which ones turn out to be more accurate over time.  This led to one of the key objectives for my blog. To track various opinions and forecasts of credible sources over time to see who gets things right more often. This takes patience and persistence because events usually play out over years. The modern 24 hour news cycle does not allow for that approach as most news and opinions come and go very quickly and are forgotten by most people.

. . . . . .

All of this led me to start up a blog dedicated to following potential major change in the monetary system. Also, how this might impact the average person like myself.  That is, a typical family just trying make a living and provide for their kids. People that normally couldn’t care less what the IMF did yesterday (like my wife and daughter for example ☺).   I felt like there was a need to try and reach out to the average person who would not normally care about this and encourage them to think about the issues involved seriously. After all,  if we have another major global financial crisis that is even worse than the one we had in 2007-2008, do you really think we can just ignore it? That it will have no impact on our daily lives? I don’t think so.

. . . . .

So, What Have I Learned After a Year of Writing Blog Articles on this topic?

A lot of course. I have learned that it is wise to keep an open mind and to continue to follow events over time. In fact, I would say this is probably the most important lesson I have learned. The one constant that I remain convinced of is that we will see major monetary system change in the future. When you follow this topic, you quickly find out that there are a lot of different views on how and when this change will happen. A lot of very intelligent and very credible people (from both inside and outside the system) have different opinions.  I think it is wise to listen to various points of view and not become “locked in” to one view so that you quit following the all the facts and only listen for those facts that support the conclusion you want to believe in. . . . . . . .

. . . . . .

Writing this blog has allowed me to make contact with people I never expected to meet as “an average person”.  Some people who are working at high levels within the system stumbled onto my blog and were willing to spend time helping me gain a better understanding of how all this works.

This has led me to conclude that the future of how and when the monetary system will change is far from certain. It could range anywhere from another huge global financial crisis that leads to rapid system change to a slow and steady form of change that unfolds over years in a controlled manner.

. . . . . .

I think we can list some outcomes that are probable however. We can then use that as a guide for making the best financial decisions for our personal situations. Below are the scenarios that seem most probable  to me after a year of learning and writing on the blog.  

--- Read the full article to see these four scenarios---

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How Do We Prepare for Future Monetary System Change?

This is the question that really matters for people who would read my blog. Learning about the monetary system can be interesting (at least for some), but most people want to get to the bottom line. How is this going to impact me and my family?    What Should I Do to Prepare?

Glad you asked. I think there is a reasonable way to deal with all these unknowns and potential major change coming in the future.  Let’s list some bullet points and then some concluding thoughts.

--- Read the full article to see the 8 bullet points ---

Thanks for visiting and reading!

Best Wishes – Larry White

http://lonestarwhitehouse.blogspot.com/