It Begins... Another High-Yield Chinese Shadow Banking Trust Defaults | Zero Hedge
Those of us watching for the end of the world have to keep our eyes peeled all over the globe. The Great Depression really got rolling after an Austrian bank default, and the 2008 crisis got its kickoff with two Bear Stearns hedge funds going drano in 2007. China's financial system is a house of cards so it may knock us over the edge, although there are plenty of other candidates. One man's asset is another man's debt...
How do you save yourself from drowning? You get rid of whatever you can to keep afloat, at just about any cost.
What happens when US debt goes on the market at fire-sale prices? Value drops - to zero.
What happens when US Treasuries have not only no interest, but no value? All those "safe" investments start to fail - including all the IOU's in the "social security lock box."
What happens when people see their savings going to zero? They try to pull out as much as they can before it really does go to zero.
What happens in a fractional reserve economy when people start pulling all their savings out? The money supply crashes. No money = falling prices = deflation. Deflation causes falling wages or higher unemployment.
You can fill in the rest.