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Daily Missive

Seven Grey Swans a Swimmin’ in 2025: #6 Involves America’s Banks

Loading ...Addison Wiggin

December 24, 2024 • 4 minute, 7 second read


bank failuresdebt crisisInterest Ratesnational debt

Seven Grey Swans a Swimmin’ in 2025: #6 Involves America’s Banks

“You’re thinking of this place all wrong as if I had the money back in the safe. The money is not here. Your money is in Joe’s house, right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others…”

–George Bailey (Jimmy Stewart), It’s a Wonderful Life


December 24, 2024— American life has gotten more complex since the 1946 holiday classic It’s a Wonderful Life.

Indeed, your small-town bank or savings and loan may primarily be in the business of 3-6-3 lending. That’s where a banker gives its depositors a 3% interest rate, lends out at 6%, pocketing the spread, and closes at 3 p.m. to hit the golf course.

But 21st-century America is far more complex. Banks engage in far riskier behavior. In 2023, for instance, we learned that banks could go bankrupt from investing in U.S. Treasury bonds.

Remember, by definition, U.S. Treasury bonds are considered the only truly “risk-free” investment.

But that’s clearly not the case. Rapidly rising interest rates in 2022 meant that longer-dated Treasury bonds dropped significantly to match those higher rates.

So when Silicon Valley Bank needed to sell its bonds for liquidity, it turned paper losses into real ones, kicking off the second, third, and fourth-largest bank failures in U.S. history.

The Fed stepped in, offering to buy those bonds at their par value. This is part of our next Grey Swan event…

Grey Swan #6: The Gradual “Nationalization” of America’s Banking System

We’re watching the slow-motion nationalization of our banking system.

From problem banks to presidential overreach.

From digital currencies to massive repo operations – I believe it all points to a government preparing to take total control of our financial lives.

But here’s the kicker – they won’t call it nationalization.

Oh no, they’re far too clever for that.

They’ll dress it up as “stability measures” or “consumer protection.” That’s what they did when they started overpaying for Treasury bonds from banks in 2023.

While that move kicked the can down the road, it left more risk on the Fed’s balance sheet at the expense of avoiding a bigger banking crisis.

When the banking system gets into a crisis, things can be changed on a dime. Contracts can be ripped up. And bankers will tell you it’s for your own good, that it’s necessary to prevent another financial crisis.

But make no mistake, once the government has its fingers in the banking pie, your financial freedom will never be the same.

Let’s take a moment to consider the broader implications of this financial power grab.

The U.S. dollar, long the world’s reserve currency, is under threat like never before.

Our national debt has exploded to over $36 trillion, more than triple what it was just 15 years ago.

And what’s the result of all this fiscal irresponsibility? Inflation.

We’re seeing a banking system that’s increasingly fragile, propped up by government interventions and easy money policies.

As Grey Swan Investment Fraternity contributor Mark Jeftovic notes:

Treasury yields seem to have gone the wrong direction after the Fed cut in September – and a half-point one at that. Here’s a visual depiction of the anomaly:

Turn Your Images On

It’s clear that the bond market doesn’t like what’s happening in the economy right now.

And it’s urgent you take measures to shield yourself from another crisis. That’s why we continue to like gold, for its long-term stability against inflation. And why bitcoin, which is far more volatile, could still make sense as a small part of your investment portfolio.

Going into 2025 and the possibility of a banking crisis, it’s important to ensure that you’re not overexposed to bank stocks. And that you keep your cash in the bank under the FDIC insurance maximum of $250,000.

We’re carefully watching the banking sector for signs of stress in the new year, especially as interest rates are adjusting to stay higher for longer.

Regards,


Addison Wiggin,
Grey Swan

P.S.  Panic hit the banking world in March 2023 when Silicon Valley Bank went belly-up after a catastrophic bank run. Like dominoes, Signature Bank toppled next, and Credit Suisse got scooped up by UBS in a fire sale. Regulators swooped in with emergency fixes to stop the financial world from melting down.

We were covering the event in real-time with live seminars. Our premise goes back to the days of It’s A Wonderful Life and Garet Garrett’s Anatomy of a Bubble in which he outlines the successive banking crises that followed the Roaring ‘20s and the aftermath of the stock market crash in 1929.

In a crisis, as we also saw in 2008, banks go first. The Fed’s balance sheet is negative now… so we’re keen to see what happens to banks after the current Wall Street fixation with Superchips finds its own pin.

Your thoughts on the top Grey Swan events of 2025 are welcome here: addison@greyswanfraternity.com.


Musk Wins Powerball (No Ticket Required)

September 5, 2025 • Addison Wiggin

The global bond market is screaming.

This week, 30-year yields hit multi-decade highs across the U.S., UK, Germany, and Japan.

America’s 30-year briefly touched 5.0% — levels last seen in 2007. Japan’s long bond is at its highest since it was first issued in 1999. Europe’s long paper is flirting with crisis-era yields.

Why? Heavy borrowing, fiscal deficits.

In just two months, U.S. federal debt has surged by $1 trillion. Since mid-August alone, $200 billion has been tacked on.

Musk Wins Powerball (No Ticket Required)
Told You So: Trump’s Top Adviser Just Confirmed the Reset

September 5, 2025 • Lau Vegys

Miran is outlining a radical plan to flip the U.S. dollar’s reserve status from a burden into a bargaining chip. To turn America’s towering debt from an embarrassment into leverage. And to reorient the entire global economic structure in Washington’s favor—while they still can.

Now, if you read through Miran’s 40-page paper, you’ll quickly realize he left a lot of other ingredients out (some of which actually make the plan far more realistic). It’s a speech, not a doctoral thesis, after all.

Told You So: Trump’s Top Adviser Just Confirmed the Reset
A Modern Money Crisis

September 5, 2025 • Addison Wiggin

A spike in money supply typically occurs during a crisis. Not when the economic vibe is simply “uneasy” and bullish.

Today’s graph strips away delusion. A massive quantity of fiat money is propping up the stock market and global economy.

That’s a trend that cannot last.

A Modern Money Crisis
The Frontier of Pax Americana

September 4, 2025 • Bill Bonner

In the early days of the Roman Empire foreign conquests brought glory, booty, and slaves. People were happy to be a part of it.

But after 100 AD the conquests largely ended. And as time went on managing the huge empire — with its far-flung garrisons and expensive bureaucracy — became less and less profitable. Taxpayers were squeezed harder and harder to pay for it.

Roman-era feds had their tricks too. The basic coin of Rome — the denarius — was inflated away. It came to be worth so little that even tax collectors wouldn’t take it. In 212, Caracalla expanded the tax base by giving Roman citizenship to all free men in the empire. But the squeeze continued.

Gradually, the small farmers — who had been the backbone and muscle of the empire — were forced to abandon their land…and even sell their wives and daughters into slavery in order to keep them alive. Gradually, too, Roman society became decadent, corrupt…and brutal, with more and more resources devoted to the war industry.

The Frontier of Pax Americana