US M3 growth has ground to a halt in February, dropping to just under $15.1 trillion. The Fear Index has also retreated slightly to 2.78%, while its 21-month moving average remains at 2.99%, perhaps a pause for breath before assaulting resistance at 3%.
Cyprus has confirmed what many here have been warning about for years: that frozen bank accounts and capital controls were coming. That the current monetary system is built on extremely unstable premises and that recent excess from our monetary central planners will have huge unexpected consequences that will radically question its sustainability. These consequences are not hard to predict, since we have countless historical examples of what happens to a currency when it is inflated away and also of what happens to a fractional reserve banking system when confidence evaporates. Even if the timing of the avalanche is almost impossible to predict, we can know at a glance – should we care to look – that a lot of snow has built up on the mountainside and that taking common sense precautions is the reasonable course of action.
We can also know that once events unfold, there will be hardly any time to react, as many in Cyprus have discovered to their dismay. It is absolutely necessary to take action before the crisis comes. It is also worth noting that events in Greece, especially the bond haircut, had a direct and cascading impact on the Cypriot banking system and in precipitating its collapse and subsequent bailout. We can expect further ripples across the eurozone.
Read the complete article at GoldMoney here.
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.