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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.


Matt Milner: Main Street’s New Gateway into Wall Street’s Playground

July 8, 2025 • Addison Wiggin

For close to one hundred years, the U.S. government made it illegal for ordinary investors to invest in pre-IPO startups — in other words, companies that weren’t public.

Unless you were a wealthy accredited investor (net worth of at least $1 million, or annual salary of $200,000), you could only invest in publicly-traded stocks and bonds.

This forced ordinary investors to miss out on big gains. According to Cambridge Associates, a financial advisor with clients including the Rockefeller Family and the Bill Gates Foundation, private startups have delivered annual returns of 55% over the last twenty-five years.

That’s five, six, seven times higher than the average returns of stocks. And it’s enough to double your money every two years or so.

Matt Milner: Main Street’s New Gateway into Wall Street’s Playground
The Labor Market’s Warning Signal Now

July 8, 2025 • Addison Wiggin

A Bloomberg survey shows 30% of everyday Americans expect the labor market to get worse. Each jump of this magnitude in the past has preceded a recession.

Labor market data is screaming that there’s trouble in the real economy.

Except, of course, the data from the Bureau of Labor Statistics – the same government agency that has “revised” away over a million jobs reported as having been created during the Biden administration.

The Labor Market’s Warning Signal Now
Here Cometh Tariff Tantrum 2.0

July 8, 2025 • Addison Wiggin

The second half of 2025 opens with fireworks and fog. The markets are still chasing dreams, even as the ground shifts beneath them. Tariffs are more than a tax — they’re a weaponized expression of a new economic order.

Profitless stocks are a signal of excess liquidity, not optimism. And every new announcement from the White House or Truth Social carries ripple effects that touch everything from currencies to commodities to your portfolio.

As an investor, your job isn’t to outguess the next tweet or tariff — it’s to understand what the world’s actually rewarding now, and what it’s quietly punishing.

In that light, cash flows still matter. Real assets still matter. Confidence, liquidity, and political clarity… matter more than ever.

Here Cometh Tariff Tantrum 2.0
Mamdani Land

July 7, 2025 • Joel Bowman

Universal healthcare and “free” (taxpayer-funded) education and the rest of the redistributive voter bribes are ways of spending money, not generating it. Progressive taxation is a means of redistributing wealth, not producing it. The difference is non-trivial.

Countries like Kuwait and Norway are not rich because of their respective governments’ addiction to expensive giveaway programs, whatever one thinks of the merits or alleged compassion of such redistributive policies. They are wealthy despite them.

Down at the other End of the World, meanwhile, president Javier Milei has been busy liberating Argentina’s long-suffering citizens from three-quarters of a century of politicians’ worst laid plans. We’ll have more about the goings on in our adopted home later in the week.

Mamdani Land