BANK RUNS STARTING: Silvergate & SVB In Layman Terms
Debt contagion just tip of iceberg
(👆Listen to audio version of me reading)
Bank run happened to us, personally…
We raised money to buy a property and renovate it, and then refinance it with a commercial lender. We used a private money lender in order to get this done. A year later our promissory note was coming due and the private money lender needed their money back.
The refinance was taking a long time and things were beginning to crumble as rates kept rising so the hurdles kept coming.
The commercial lender ended up denying the loan because they said the value of the property was under $100,000 so they no longer wanted to do the loan.
It was an arbitrary rule they just kept changing as the market kept deteriorating.
This put us in a position where we then had to find other cash in our portfolio to pay off a private money lender, and take on the property in full.
This is the property we are still trying to refinance we talk about in our monthly portfolio allocation.
I try to have more than enough in reserves to cover the debt obligations we have out just in case something like this happens.
We would have been in trouble if we couldn’t meet our debt obligation by paying our private money lender back.
This is what is happening in bank runs or crypto exchanges collapsing or any other financial institution you see in trouble.
We have been talking about Credit Suisse and Blackstone freezing withdrawals which in translation is them not being able to meet obligations.
They get to play by a different set of rules because these institutions are doing dirty work for the government and get bailed out at taxpayer’s expense.
A private citizen like myself doesn’t have that kind of luxury so I have to make sure that my books balance and I can pay things off in a timely matter.
The debt contagion I have been playing chicken little about for years is at our doorstep.
Robert Kiyosaki taught me that you only swing for the fences, take gambles, and really get outside your investing comfort zone when you have excessive passive cashflow above and beyond your monthly expenses.
You aren’t just financially free but you are above and beyond a “comfortable level.”
I’m not where I would like to be personally with our portfolio so I don’t pretend to be “shooting the moon.”
I also see the problems in the legacy fiat system that I cannot unsee.
Admittedly, this makes it EXTREMELY hard to go in to the markets and dump cash around knowing at any minute credit markets could freeze up and cards and gas pumps stop working.
Won’t be the first time and sadly probably won’t be the last time that happens.
I along with many others, have been warning for years (albeit looking like an idiot,) saying things would implode, even worse than 2008.
The Federal Reserve has done a remarkable job at making me look like a moron with unlimited currency printing (QE) and basically zero interest rate policy (ZIRP) over the past decade.
They can kick the can down the road as far as the eye can see but eventually the road does come to an end.
I’m not saying the entire system will blow up this week, but I’m wrong until I’m right 🤣
It will most likely coincide with a monetary transition.
Maybe not a reserve currency transition/death of the dollar scenario but most likely will result in the overlords trying to transition everyone in to their “digital dollar” or FEDcoin which we call “slavery coin” here.
Between the financial system literally hanging by a thread, world wars, and governments all around the world who hate their citizens do you really blame me for feeling this way?
I know their end game so that doesn’t help either because it’s not conducive to any of us building wealth.
The “Conspirator’s Hierarchy,” “Tragedy & Hope,” ”Creature from Jekyll Island,” “The Naked Communist” and many others have outlined the exact plans that globalists have in store for the peasants.
Building a portfolio outside of the unstable matrix:
Bitcoin, gold, silver, food storage, water filtration, energy capacity, guns, ammo, land, gardening, and building community are the biggest topics we have talked about for years here, and on our YouTube channel.
The more independent and resilient we can become the less we need to depend on government and others and the more robust the system becomes.
Not to mention the hope and the confidence you gain by preparing a little bit.
This process will play out again with bitcoin, demonetizing all assets in the coming years and gold and silver getting a bump as well.
Best part is no one can take either of those things from you.
I don’t like stocks or paper assets that have counter-parties or companies and account brokerages that you have to trust a 3rd party to unlock for you.
Not a situation I would like to be in when my government and the companies they are in bed with are at odds with me and civil unrest is on the rise.
What is a bank run?
We have a fractional reserve system meaning every time you put one dollar in the bank in deposit the bank can lend out $.90 or maybe the entire dollar back out to other people in order to make money on the loan you gave them.
And yes it is a loan. Once you give your money to the bank, it’s legally not yours anymore.
You give them full ownership of your dollar and they can do pretty much whatever they wish with it. They might be giving you .01% interest rate while they get to loan it out at 5-7% for car or home loans, and keep the spread.
This is how banks/lenders make money; pay short and lend long.
Fractional reserve lending is how 90% of the currency in the system is created as just digits in the computer.
Because of this process banks have a little bit of vault cash, which is the actual dollars in the bank. And a whole lot of bank credit, which is just the numbers in the computer that say someone owns some thing yet it’s loaned out to someone else.
So, when you or I come back to get our dollars and the vault cash is used up and there’s only bank credit left, we don’t get anything. The bank is insolvent because they cannot meet their obligations.
We also just showed how FDIC recently came in and said there would be bank bail-ins where they just skim out of people’s accounts whether they were above or below the insurance amount of $250,000.
Not to mention they only have $125 billion in assets to cover $9 trillion in liabilities.
So any one with simple math can do the calculation that they can’t make good on nearly any of their promises.
You better hope your bank collapses first and you get most your money back before the rest of the system fails.
Stay strong,
Brandon
Ps. DO NOT BAIL THESE PEOPLE OUT! This is exactly how these problems start and perpetuate in the first place. This is how people keep getting rug-pulled and lose their money. This is why everything we buy and consume constantly costs more. STOP the madness. And selfishly people like myself and others who have patiently waited to buy up the market as a responsible actor in the system constantly get flushed to the side as bad actors, investors, and businesses are allowed to be propped and rewarded to provide terrible products and services to the consumer. ENOUGH! Merit must take its rightful place in free markets and show true price discovery and flush the garbage out of the system or how does anyone ever learn and grow? If we don’t allow the forest fire to burn how do we have new and better growth take its place?