Banks Actions Speak Volumes

It just gets more ridiculous every time we turn around. I just saw that Wells Fargo is going to shut down all existing personal lines of credit (CNBC). Back in 2020 they stopped issuing new lines of credit which, in itself, really makes no sense because banks make money by issuing loans. This is different however because whether you want your line of credit closed or not- IT WILL BE CLOSED. Any outstanding balances will require at least minimum payments.

At first glance I have to think that, since these are loans that are mostly unsecured, there must be growing anxiety about being repaid for these loans. Banks are funny that way- they always want to win.

To me, this is a GLARING example of what I have been writing about for years. This massive debt that has been built up in the last 50 years CANNOT be repaid with fiat currencies retaining anywhere near their current value. It appears that Wells is firing the first salvo by cutting off a group of people who may have few other options when it comes to acquiring credit other than the bank’s own credit cards that may charge up to 30% in interest. There is no physical asset to repossess if these type of loans go bad.

I have also been told that other banks have issued HELOC loans (Home Equity Lines of Credit) and have reduced the line of credit so that additional funds cannot be accessed. It also appears from this information that the banks aren’t too sure about real estate “always going up”. Otherwise, why would they reduce the amount you can borrow when they make their profits by charging interest on what is being accessed?

These are just two more examples of warning signs that very few people are paying attention to.

Because of the length of time the rent moratoriums have been around, and mortgage forbearance plans have been in place, there is very little, if any, discussion about the 40 million or so Americans who are at risk of losing their current residences when these government schemes come to an end.

As the economy continues its descent into third-world status there is very little talk about the (admitted- likely many, many times higher) national debt of 28.5 Trillion and climbing. There is no debate about the responsibility of spending $7 Trillion on our national budget while tax collections are $3.5 Trillion. (US Treasury) The other $3.5 Trillion will likely be magically conjured up by the central bank and we will owe interest on that computer blip. There is some talk but little action (other than federal bailouts of bankrupt states) about the $1.238 Trillion owed by state governments and $2.129 owed by local governments. The bankrupt state of Illinois is borrowing DIRECTLY FROM THE FED. Remember, these folks can’t “print money” up out of nowhere so their situation is far more dire than the federal governments. Let’s also not forget about the $150 TRILLION in UNFUNDED (meaning nothing set aside) liabilities for social security, medicare, and prescription drug programs to name a few.

For anyone who is still not getting the picture these numbers equate to a debt for EVERY (man, woman and child) of over $548,000.00. If we all write that check out right now we can get a fresh start. Somehow, I think that the 82 MILLION on Medicaid (all assets virtually gone), the 36 million living in poverty and 43 million collecting food stamps will have a hard time ponying up.

In addition to these horrific numbers, we are adding to this massive debt load by the minute.

It appears those at the top are fat and happy while many are struggling to survive. Of course, those at the top don’t really worry about inflation because their assets may rise right along with prices. Those on the bottom, however, may find a large inflation event a threat to their very existence.

In the meantime many CEOs and executives are buying back their own stock and paying dividends not with current earnings but with newly-issued DEBT. Short-term great for shareholders and C-Suite bonuses but long-term a threat to a firm’s very survival as the corporate debt is exploding uncontrollably also. This could lead to severe consequences in the future particularly if rates were to rise, credit was to tighten, or the “recovery” is not what we are expecting it to be.

Cities and states have gotten a reprieve from the latest stimulus package which included hundreds of billions for states to pretend they can pay their bills without being able to “print” money out of nothing.

My whole point here is that counting on most of these entities to pay you back over time is like expecting the tooth fairy. While we have seen virtually every trick in the book to keep the façade going I have to believe that whatever it takes to “pay” the debts- it will likely be done. This does not mean that you will be “repaid”. If an entity owes you $100,000.00 and they pay you but all it will buy is a nice meal did you get what you originally signed up for or did you get an illusion?

So many people do not know history. I wrote over 10 years ago that once you go down the “money printing” road it has led to misery 100% of the time. Each intervention has to keep getting larger and larger to keep the game going until… there is no amount that is enough.

There are only two options. #1 Stop the interventions and there will likely be an immediate collapse and social chaos like we have never seen before. #2 Keep on the “printing” regime and keep it going until the populace wakes up and realizes that they better start buying hard assets and dissolving their paper positions. At that time, their very source of power (the ability to create “money” out of nowhere and buy assets) will be neutralized as most people won’t want to be holding an asset that is losing value.  

While nobody can know the timing, history is full of examples of how this all plays out in the long run. My guess is that there will be a planned US dollar crisis which will lead to a different reserve currency (likely a basket of CBDCs- Central Bank Digital Currencies) most likely administered by the IMF and the global “reset” that we are hearing so much about will be underway. Since the BIS (Bank of International Settlements- the central bank of central banks) has mandated that all central banks have a CBDC by 2025 and that all central banks are writing and speaking about their own efforts at introducing their own CBDCs it appears that we may be able to discern about when this might all play out. My guess- before 2025. Possibly a few years prior to 2025.

In the meantime I will be buying hard assets and companies that produce those things that we need to survive. Gold and silver at the top of my list because I don’t have to worry about needing someone else to pay me back. With inflation picking up it appears that many hard assets make sense to me at this time along with quality companies that produce real goods and are not drowning in debt.

Be Prepared!

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