By: Larry MacDonald

Could we be getting close to the time when major parts of the financial system go on “holiday?” Just like the U.S. banking system had to be shut down at times during the Great Depression of the 1930s to halt the ruinous rush to withdraw deposits, could the same now happen to the “shadow” (unregulated) banking system?

Specifically, it would not be too surprising to see the whole hedge-fund industry to go into an indefinite lockdown period to keep withdrawals from fuelling waves of forced selling in financial markets. Similarly, “holidays” could surface elsewhere too, like in the money market mutual fund industry, or even the entire mutual fund industry.