FOMC meetings are underway at the Eccles Building in D.C. today. 

And Powell and company are trying to carry out an impossible balancing act. Whether to raise fed fund rates to tame inflation? Not aggravating a financial crisis and a recession? (By now, a “soft landing” is off the table.)

All while four U.S. banks floundered in just eleven days. And it looks as if the crisis isn’t over… 

Paradigm’s macro expert Jim Rickards, for one, says don’t hold your breath. 

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Your Rundown for Wednesday, March 22, 2023...

“A Slow-Motion Rolling Panic” 

“The biggest mistake any investor can make right now is to believe that the banking crisis is over,” Jim says.

“Veterans of such crises — and I include myself in that category — know that once the dominoes start falling, they keep falling until some government intervention of a particularly draconian kind is imposed.

“In less than two weeks, we’ve seen sequential bank failures,” Jim notes. “Some were handled by regulatory intervention, others by private bailouts and still others by central bank bridge loans. But in all cases, the target bank had either failed outright or was on the brink of failure.

“We’ve seen some significant regulatory actions from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the U.S. Treasury and the Swiss National Bank, but the fixes have been temporary and followed quickly by new failures.

“This will continue,” he says. 

“What’s important to bear in mind is that crises of this type are not over in days or weeks. A slow-motion rolling panic that takes a year or longer is more typical,” Jim says.

• “The September 1998 financial crisis, involving Long Term Capital Management, actually began in Thailand with a currency devaluation in June 1997.” (Jim, in fact, was an eyewitness — he was one of the attorneys who helped with LTCM’s liquidation.)

• Jim adds: “The September 2008 bankruptcy of Lehman Brothers was the culmination of a panic that started in the summer of 2007 with mortgage losses and a run on a French bank. That panic proceeded with the failure of Bear Stearns in March 2008 and the double failures of Fannie Mae and Freddie Mac in June 2008.

“In other words,” says Jim, “panics can run for a year or longer before they are finally squashed by massive regulatory intervention. Using that measure, the current crisis began in March 2023 with the Silvergate collapse and could run until early 2024 before matters are resolved.”

[Jim suggests: “Investors should increase their cash allocations and allocate up to 10% of investable assets to physical gold or silver as a hedge against a banking sector collapse. The time will come for stocks,” he says, but “not yet.”]

“The Fed is in an impossible position,” Jim concludes. “On the one hand, they must tighten monetary policy with further rate hikes to subdue inflation. On the other hand, they must loosen monetary policy through a new kind of QE — underwater asset repurchases — to keep banks afloat.

“The result is confusion both at the retail and institutional levels,” Jim says. “The economy is sliding into both a recession and a global financial crisis… with no salvation from a Fed pivot,” he admits. “And no way out for those who don’t act before 2 p.m. TODAY. 

“According to my research,” says Jim, “America is about to get hit with a seismic-sized economic event. A crash so massive that the Dow could eventually plummet even 60%... and not recover for decades. I’m calling it the ‘Last Drop’ because once this crisis hits, there will be NO economic recovery.”

In case you missed Jim’s “Last Drop Summit” Monday afternoon, you owe it to yourself to review Jim’s warning about this massive event set to hit the markets just four hours from now.

Market Rundown for Wednesday, March 22, 2023

The S&P 500 is nominally in the green at 4,035. 

Same goes for the rest of the market: Oil’s still under $70 for a barrel of WTI. 

Gold’s taking a breather at $1,941.60 per ounce. 

And Bitcoin’s sitting at $28,265. 

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