#dtcc

So I intended to do an update yesterday, but as I was double-checking some numbers I discovered some much more concerning things that needed further research.

I can’t give financial advice, I can’t predict the future, and I don’t understand half of what I’m reading. I believe our financial system is rigged, such that while I can take educated guesses at what might happen, I know that financial institutions and government can take unprecedented actions that shift the equation in unexpected ways.

January was a prime example. Based on the numbers, the price should have gone far higher. No one was prepared for the biggest retail trading app to shut down buying - which manipulated the stock price to push it down.

So while I can make guesses, please know that I could be wrong if any of the big players here decide to do something unexpected.

As I said in one of my recent updates, many contracts are coming due this Friday, such that hedge funds and market makers (the financial institutions that sell you stocks and buy stocks from you when you buy and sell) will owe more shares than exist. They can’t cover. It’s not possible.

Now, what they can do is kick it down the road as long as possible to try to wear retail investors out so we’ll give up and move on. Or at least, that’s what they could do.

Next week, the DTCC (the organization through which nearly all trades go) is implementing new rules that basically make the hedge funds and market makers start covering right away. That’s what should happen, anyway. I’m still trying to account for these institutions to just say “no,” or to somehow lie about their actual holdings and liabilities.

But if they follow the new rules, they have to start buying shares to cover their contracts, and the squeeze will begin. Again, this depends on them following the new rules and not pulling any other shenanigans.

If Melvin Capital has to cover their positions all at once, they will go bankrupt as the GME price skyrockets.

If MC goes bankrupt, then Citadel assumes their liabilities.

Citadel seems to be preparing for this, because they recently issued $600 million in BBB- bonds. Basically, they took out a loan from investors while simultaneously telling them there is a very low chance that loan gets paid back.

The bonds get paid back in 2026, and it’s my guess that Citadel doesn’t think they’ll be around at that point. So they got $600 million in free money to either cover their own liabilities (which are far greater than $600 million) or pay “bonuses” to their executives (far more likely).

This is VERY similar to what big banks did in 2007 when they knew the housing crash was coming and that they were about to collapse.

Basically, this allows the executives to keep the money and then claim they don’t have any capital when it comes time to cover their liabilities. They can let Citadel go bankrupt, walk away, and start a new fund/institution/whatever with the money they siphoned off.

If Citadel goes bankrupt, however, their liabilities go to the DTCC. While all this is happening, the Gamestop price will be shooting up as shares are bought to cover these liabilities. So the liabilities themselves actually grow larger, because they don’t owe money - they owe shares. At whatever price that share happens to be.

Now, the DTCC manages $63 trillion in assets for its members, which include every big bank and financial institution you’ve ever heard of. According to the DTCC’s own documents, if a member defaults and has liabilities that need to be covered, the DTCC can actually liquidate assets belonging to the non-defaulting members. This means they could go to, say, Chase Bank and say “we need x amount from your assets with us so we can cover Citadel’s liabilities,” and Chase has to give it to them.

So as the price goes higher, especially if the majority of retail investors refuse to sell, we could reach the point where the DTCC has to liquidate banks to buy shares at $5k, $10k, $50k, whatever price it goes to.

On r/wallstreetbets and r/GME, people are suggesting that shareholders can name their price. Because the number of owed shares is several times the number of shares that exist. So the DTCC would have to buy a share, give it to whoever they owe it to, and then try to buy that share back so they can give it to someone else.

Now, if enough people sell, it’s possible this goes into the thousands but then calms down. Which still leaves a lot of people making a lot of money.

But if all the people who say they’re holding actually hold...$100k might not be a meme.

Basically, this has the potential to bring down our entire financial system.

Now, when and how does the government step in? Who do they bail out? Because short of forcing people to sell their shares, which would kick off its own set of serious problems, all the government can really do is keep throwing money at the problem.

Money printer go BRRRRRRRRRRRRRRRR.

So we could end up with an entire financial collapse and/or Weimar Republic-level hyperinflation.

So what can you do?

Again, I can’t give financial advice. But I can tell you what I’m doing.

First, I’m holding my gamestop stock. There will come a point where I sell, but I don’t know what that point is yet. I’m thinking at least $5k+ , because that allows me to quit my day job and maybe, just maybe we won’t bring the whole system down. But there’s a part of me that thinks “if I sell, am I just allowing a corrupt system to continue because I’m afraid of what happens when it’s torn down?” - so I may be holding into the tens of thousands. We’ll see.

I also may trim down my holdings - wait until multiple thousands and then sell enough to cover my initial investment, then hold the rest and see where it goes. Then, if it crashes, I didn’t lose anything, and if it goes to Alpha Centauri I get to quit my job and focus on preparing for what could be a severe financial collapse.

On the prepping side, I will definitely be increasing my food and water storage. I’ve talked before about my concerns for a grid down and/or supply chain collapse this winter, and if that happens during an economic collapse...I definitely want to be as prepared as possible.

If you’re not holding GameStop stock and you don’t want to buy in now (since this is inherently risky), I do highly recommend the following:

- Store at least a month of food and water for you and your family.

- Stock up on any necessary medications

- Keep your gas tank at least half full at all times, and consider storing gas if you have the ability to do so safely.

- Inventory any emergency supplies you have and think about what things you might be missing. Now is the time to stock up!

Bonus: if you’ve been considering buying a house and/or land, especially put away from the cities, this may be the time to do it.

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