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Sports, Politics, Financial Markets, Silver & More

Money Market Funds – Suspension of Redemptions

The SEC just voted 4-1 to allow suspension of redemptions in money market funds if they feel the situation warrants it.  In a very related development, the 1 month T-Bill now has a negative yield for the first time since March last year.

These heavy-handed beurocratic dolts have done this to prevent a ‘run’ on money market accounts, but of course this is now exactly what is likely as people usually like to have access to their money when they want it…again, the govt interferring with private liberties in the name of being a do-gooder. 

With 1 month T-Bills sporting negative yields again, does anyone really feel the financial system is back to health again, or even just more stable than the Fall 2008 nightmare?  Nothing has been fixed!!! Problems have been papered over, largely via the Fed buying everyone’s toxic crap paper in addition to govt debt, as well as the toxic repositories of Fannie & Freddie with their new ‘unlimited til 2013’ caps to buy more mortgages that’ll likely never be paid off, and that no private investor would want to buy at these artifically low yields/high prices. 

Govts piling on debt and central banks acting as the buyer of last resort while allowing banks to mark their marketable securities to model and not market is not a long-term solution, it is only lipstick on a pig. The day of reckoning is still to come, cannot be denied, and is only going to be more painful because of the endless delaying and further economic distortions caused by govt and central bank interference.  Own the shiny metals cheap while you can…silver on sale at $16.50 as I type this and gold under $1,100.

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