The “X-Date” Blues

When piggy banks cry. [Altucher Confidential] April 12, 2023 [WEBSITE]( | [UNSUBSCRIBE]( It’s about as delightful as waking up in your dentist’s secret basement. [Hero_Image] The “X-Date” Blues By Chris Campbell Biden Admin Furious Over This New “Alternative” Currency [Click here for more...]( [What you see here is a new “alternative” currency that’s taking America by storm…]( One which could ruin Biden’s CBDC plans. It’s already popping across the nation… including Utah, New Hampshire and Nevada. [If you’re worried about Biden Bucks then you must watch this short 2-minute video where Jim Rickards breaks down how this “alternative” currency works…]( [Chris Campbell] CHRIS CAMPBELL Dear Reader, You're forgiven, my friend, for feeling a touch of the blues. The newsfeeds are ablaze with tales of bank failures, recession, diminishing world trade, dwindling manufacturing output, and beyond. It presents a state of affairs about as delightful as waking up in your dentist’s secret basement. And if all that wasn't enough to make your head spin, we've also got the possibility of the U.S. Treasury defaulting on its IOUs. Why, you ask? Well, it's on account of a potential hitch with the debt ceiling, a fancy way of saying that Uncle Sam is neck-deep in debt and needs to borrow more bucks to keep the wheels spinning. (It's like asking your credit card company to raise your limit after a drunken midnight shopping spree.) Usually, this wouldn't raise an eyebrow. Usually. But when one political party is running the show at the White House and the other is calling the shots in Congress, things can become a bit... complicated. Like attempting to whip up a five-star dinner surrounded by a frenzied army of toddlers jacked up on pixie sticks - only with perhaps more mess and chaos. True, this bizarre conundrum has played out in recent decades, and somehow the higher-ups managed to pull things together. So, one could question, why should we waste our worry on it now? Our colleague Jim Rickards outlines two reasons in today’s featured article below: For one, the debt has expanded to leviathan-like dimensions, escalating quicker than our toddler army’s curiosity in a room full of unguarded breakables. And for two, we're potentially grappling with bank stampedes, a Eurodollar tempest, a shortage of Treasury bills, and the coming “X-Date.” Rickards sums it up below. Read on. DEADLY Secret Biden Doesn’t Want You To Know [Click here for more...]( While Biden, AOC and the rest of the Dems will swear up and down that “green energy” is a godsend that will cure all of the world’s energy problems… [The truth is MUCH more sinister…]( In fact, not only is “green energy” completely unreliable… It’s also DANGEROUS in ways they WON’T tell you about! [Click here NOW to learn the TRUTH, before it’s too late](. Where Do We Go From Here? By Jim Rickards Will this new financial crisis continue? We know that a banking crisis has already begun. We witnessed five bank failures or rescues in 11 days including Credit Suisse, one of the largest banks in the world and the second largest in Switzerland. Combined losses of stockholders and creditors of these institutions exceed $200 billion. Market losses in the banking sector are much greater. Walter Wriston, the greatest banker of the 20th century after Pierpont Morgan, personally tutored me on this topic 40 years ago. In a bank run, you can pull your money out of banks and invest in gold, silver, land or anything else. But you give the money to the seller and she puts it back in the bank. The point is the money always ends up in the bank. The system is a closed circuit. Of course, it could go to a different bank, but all banks can borrow from each other through the fed funds market and the Eurodollar market. Again, the money always ends up in the bank. Putting cash in a coffee can (or mattress) is one exception, but if you try to withdraw more than $10,000 your bank will file a Currency Transaction Report (CTR) with the Financial Crimes Enforcement Network (FinCEN) and you’ll end up in a file next to Osama bin Laden. And the IRS gets a heads-up. So that’s not a practical solution. The bottom line is money always ends up in the bank. Again, the system is a closed circuit. The recent bank failures and rescues were accompanied by extraordinary regulatory actions. These actions have thrown the U.S. banking system and bank depositors into utter confusion. Are all bank deposits now insured or just the ones Janet Yellen decides are “systemically important”? What’s the basis for that decision? The most important question is: Is the crisis over? Has the Fed done enough to reassure depositors that the system is sound? Has the panic subsided? The answer is no. The panic is just getting started. We base that answer on the history of the two acute financial crises in recent decades — 1998 and 2008. The 1998 crisis reached the acute stage on Sept. 28, 1998, just before the rescue of Long Term Capital Management (LTCM). We were hours away from the sequential shutdown of every stock and bond exchange in the world. But that crisis began in June 1997 with the devaluation of the Thai baht and massive capital flight from Asia and then Russia. It took 15 months to go from a serious crisis to an existential threat. Likewise, the 2008 crisis reached the acute stage on Sept. 15, 2008 with the bankruptcy filing of Lehman Bros. But that crisis began in the spring of 2007 when HSBC surprised markets with an announcement that mortgage losses had exceeded expectations. It then continued through the summer of 2007 with the failures of two Bear Steans high-yield mortgage funds and the closure of a Société Générale money market fund. The panic then caused the failures of Bear Stearns (March 2008), Fannie Mae and Freddie Mac (June 2008) and other institutions before reaching Lehman Bros. For that matter, the panic continued after Lehman to include AIG, General Electric, the commercial paper market and General Motors before finally subsiding on March 9, 2009. Starting with the HSBC announcement, the subprime mortgage panic and domino effects lasted 24 months from March 2007 to March 2009. Averaging our two examples (1998, 2008) the duration of these financial crises is about 20 months. This new crisis is one month old. It could have a long way to run. On the other hand, this crisis could reach the acute stage faster. That’s because of technology that makes a bank run move at the speed of light. With an iPhone, you can initiate a $1 billion wire transfer from a failing bank while you’re waiting in line at McDonald’s. No need to line up around the block in the rain waiting your turn. In addition, the regulatory response is faster because they’ve seen this movie before. That begs the question of whether regulators are out of bullets because they’ve already guaranteed almost everything so they don’t have more rabbits to pull out of the hat. This could be the crisis where the panic moves from the banks to the dollar itself. If savers lose confidence in the Fed (we’re almost there) not only will the banks collapse, but the dollar will collapse also. At that point, the only solution is gold bullion. Further evidence for a continued crisis comes from the fact that no sooner was the Credit Suisse shotgun wedding completed than investors aimed their sights at Deutsche Bank, another perennial weak link in the chain. Who’s next? Barclays? Santander? We don’t know. Neither do regulators or investors. But we do know more failures are coming. By the way, this is not really a banking crisis even though it plays out in the form of bank failures. I don’t want to get too deeply into the weeds here, but it’s really a Eurodollar crisis. Eurodollars are dollar-denominated deposits held at foreign banks, and therefore outside the jurisdiction of the Fed and U.S. banking regulations. Although they’re called Eurodollars, the banks where they’re deposited can be anywhere in the world. It’s a global system. The eurodollar market is actually one of the world's major capital markets. They need a constant supply of depositors parking their money in foreign banks. These banks face a liquidity challenge if deposits drop. What’s going on behind the curtain is a Eurodollar crisis caused by a shortage of Treasury bill collateral to support derivatives positions, and shrinking balance sheets as a consequence of the collateral shortage. Why doesn’t the Treasury just issue, say, $2 trillion of new T-bills and let the primary dealers and Fed underwrite them with as much printed money as needed? One reason is that neither Jay Powell nor Janet Yellen understands what I just described. The other reason is that we’re up against the X-Date when the Treasury runs out of cash and can’t borrow more because of the debt ceiling. Is Congress ready to raise the debt ceiling? Nope. It’s the usual Democrat versus Republican game of chicken with no resolution in sight. So we go from bank runs to a Eurodollar crisis to a Treasury bill shortage to a debt ceiling standoff in no time. Do regulators and financial journalists understand this? No, they don’t know how to connect the dots. We can’t rely on regulators this time. We’re on our own. Best, Jim Rickards For Altucher Confidential --------------------------------------------------------------- Warning: Will “Bidenflation” Destroy Your Retirement? [Click here for more...]( If you’re like most Americans, you’ve worked hard for decades to build your financial legacy. And now, as a result of Biden’s disastrous money printing policies, that’s all at risk. According to one top retirement expert, “Bidenflation” threatens to destroy your retirement and make your hard-earned savings worthless. That’s why you must take action right away to protect yourself… [Click here now to get the simple, step-by-step actions to survive “Bidenflation.”]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Altucher Confidential e-mail subscription and associated external offers sent from Altucher Confidential, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@altucherconfidential.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Altucher Confidential is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your Altucher Confidential subscription, you can ensure its arrival in your mailbox by [whitelisting Altucher Confidential.](