Escape Route

Forty seven dead beats living in the back street
North, east, west, south--all in the same house
Sitting in the back room waiting for the big boom
I'm in a bedroom waiting for my baby
--Escape Club

The more I ponder the global macro situation, with particular attention on Europe, the more I feel the urge to move more dollars out of the banking system. As my buddy Fil observes, if people begin lining up to take their money out of European banks, then it will be game in a matter of days.

At that point, depositors either a) lose their wealth in a deflationary bank collapse, or b) lose their wealth in a hyperinflationary confettifest of money printing to return nominal balances to depositors.

Either way, wealth gets destroyed.

That's Europe...not our problem, you say. Perhaps. But the world is an interwoven one. There is more than one row of dominos that links the European finanical system to the US. Moreover, it is easy to visualize a fraction of US citizens edging their way toward the exits of domestic banks should a full fledged European banking crisis be plastered across CNN.

In a banking system leveraged 10:1 or more, it would not take much loss of confidence to render the system insolvent.

In any event, I've been buying more precious metal recently. Today I bought my first physical silver in more than three years.

position in gold, silver