My View on the Economy - "not financial advice"

Not writing this to be cute or fun. This is what most likely is coming.

On March 11th, the Government is not going to extend its BTFP - Bank Term Funding Program. This is going to send a Cataclysmic shock through America that has never been seen before. This program effectively allowed regional and smaller banks to borrow money from the Gov at lets say 2% interest (I am making up all the figures, this is not financial advice :)) which then they could place back at the federal reserve to receive a higher interest rate. SO... they borrowed a lot of money to make more money? But where does all that money come from?

They print it. Devaluing your own purchasing power as an individual by shifting the supply & demand. Where I see things heading is all the new loans made (after March 11th) are going to have higher rates than what the federal funds rate is. Smaller/mid sized banks are going to go insolvent when this happens. The reason is that the program allows banks to always borrow more money from the government if they need it. If the Gov doesn't "have it" they print it. This endless cycle of reckless borrowing is really what drives up the debt. The banks are not spending all this money, but they themselves are lending it out... In huge quantities. The effect of this is that many corporations are over leveraged because they have been getting cheap loans from the bank. Artificial cheap loans of fake money. If a bank has a way to automatically hedge their profits by borrowing from the fed, that allows them to lend out much more money at a lower rate themselves. Lending more money out allows them to borrow more through the BTFP. So that comes to a Screeching Halt now. Where are we?

These companies have long term debt that is coming due, and they will need to refinance their loans to keep up with their own Reckless spending. The banks won't be able to borrow, and make money from the Fed so the new Loans will be at a higher rate. Companies will need to raise more capital to pay back these loans and growth will stagnate or decline. Some companies will survive, to do so you will see massive layoffs, selling off company assets, bonus cuts, hour cuts, PRICE INCREASES. The ones that don't will have all of the above minus the price increases :'). So lets talk about the impact this will have on the stock market before we move on.

Most people work for a company - they have been lied to that the stock market is a completely safe investment. It is not, it currently is near all-time highs due to the fraudulent system that it is played on. All your money is usually funneled into a 401K, these have pre-selected, or limited options for where to invest your money. Now imagine a bucket of lets say 100 total funds that all of America's 401K's are paying into. What happens when 1% of the bottom has a hole? it drains slowly, but the new funds coming in keep it full. Now increase the 1% ->10%. Instead of a hole imagine it the unemployment rate. The water that is filling the bucket is also decreased inversely with the unemployment rate. Point being that much less money is going to flow into the bucket, and much more is going to be taken out. This pushes stock prices down. Also the loss of incomes for many is going to create a run on retirements if cash is needed. Also pushing it down. Going back to the companies for a bit, another tool that they can use is a stock offering. Lets say a stock is $100, but they really need money. They can issue new shares at a lower price in order to raise funds. They get money, but their stock is diluted and the share price drops. Now how does this all play together to create what i believe to be the Last Recession. Companies that can't pay up go bankrupt. But the small/mid banks still need money to pay off uncle Sam, money they no longer are getting from those bankrupt companies. Now they have to sell off assets, cut jobs, cut clients credit cards and accounts that are past due, (yes they can do that, and they are decreasing late fees for past due accounts so Banks will cut these risky accounts at higher rates now), and they themselves will suffer massive stock price decreases as a result. Across the board companies are going to get hit hard in profitability and will raise prices to try to survive. This makes absolutely no sense - higher prices when no one has jobs, the banks are bankrupt, you can't borrow money.... Yes, this is exactly what happened in many countries through history. They devalued the currency by printing more, allowing them to get more now, and just push the bucket down the road. Well now the bucket is coming due and someone has to pay.

None of this is to scare, but to teach. It is not always safe to believe others just from their words, look at their actions. The last bailout that happened the People had to pay for. When they run out of money they just print more. I don't think the printers are going to work very much longer as we approach hyperinflation. The US dollar - Will be replaced. A new Centralized banking digital currency is coming and anyone that lost everything from the collapse they will "forgive" all your bills if you do exactly what they say. Again, this is not financial advice, but the best move given what MAY happen would be to keep some cash on hand to buy companies that survive but are barely breathing (when the economy rebounds these will make you millions), Refinance a bad loan while you can and pay it off as quickly as possible, XRP, Keep 3-6 months cash ready in case of need and most importantly decrease personal reckless spending on debt. Rates are going to go up massively, things will cost more. Unless you actively do something to create wealth, your buying power will be pummeled into the ground. Live with Love, we are all going to get through this.

King Duffey