muses of the moment

March 19, 2011

Shadow banking system

Tipping Points had an excellent post via zerohedge yesterday. He explains the shadow banking system and governments’ only, but failing solution: print money.

Click here.

The recent crisis in Japan has put severe pressure on an already unstable shadow banking system. The Japan-Yen carry trade is a major source of revenue in the shadow banking system. The recent reaction to dump anything having to do with Japan and unwind currency trades has caused all countries, Japan and the US especially, to “print” more money to inject into the financial-currency trading system to keep it from collapsing.

This is the reason why Chris Martsenson is so concerned and issued an alert. This is why groovygirl is so concerned and issued an alert. This is part of the collapse of all debt that Martin Armstrong talks about.

I don’t think this is the final blow, they are printing money at a furious pace this week and the G7 made more agreements to continue to do so. However, as you can read in Tipping Points post above, the printing is becoming less and less effective. In addition, we don’t know exactly where the weak points are in the shadow banking system until some crisis happens, because it is so opaque. Therefore, anything is possible at anytime. This is why you want to be prepared BEFORE the crisis, there will not be an opportunity to prepare during it.

Have you heard anything in the main stream media or official government statements that the Japan earthquake caused a run on the shadow banking system and the entire global economic system has the potential to collapse from the domino effect of that one event? No, I didn’t think so.

There is still the possibility of collapse and closed markets, this thing is not done yet. It will take months to fully play out.

In the meantime, all governments are printing money and will do so until it doesn’t work anymore. The real inflation rate in the US is now 9.6%. Hyperinflation here we come.

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