Guest Post by Simon Black
Yesterday the Chair of the FDIC released an astonishing video asking Americans to keep their money in the bank.
Accompanied by soft piano music playing in the background, the official said:
“Your money is safe at the banks. The last thing you should be doing is pulling your money out of the banks thinking it’s going to be safer somewhere else.”
Amazing. I was half expecting her to waive her hand and say, “These aren’t the droids you’re looking for…”
As I’ve written before, there’s $250 TRILLION worth of debt in the world right now: student debt, housing debt, credit card debt, government debt, corporate debt, etc.
And let’s be honest, some of that debt is simply not going to be paid.
Millions of people have already lost their jobs. Millions more (like the 10 million waiters and bartenders across America) are barely earning anything right now because their businesses are closed.
A lot of those folks have no emergency savings to fall back on during times of crisis, so they’re going to be forced to choose: pay the rent, or buy food.
The government has already suspended evictions and foreclosures, which is a green light for people to stop paying the rent or mortgage.
And that means banks will take it in the teeth.
This is what happened back in 2008– millions of people across the country stopped paying their mortgages, and the banking system nearly collapsed as a result.
Today it’s a similar situation; a lot of people are going to stop paying their mortgages, credit cards, auto loans, etc. And that directly impacts the banks.
Businesses are in deep financial trouble too.
According to the Wall Street Journal, the median small business in the United States has a cash balance that will last them just 27 days.
And many are operating with an even smaller safety net; the median restaurant, for example, has a cash balance of just 16 days.
These businesses have been told to close down due to the Corona Virus. And it’s likely that many of them will never re-open.
A lot of these companies also have debt. And if they close, those debts will never be repaid.
Even big businesses are susceptible to failure.
Every airline, cruise ship operator, hotel, retail chain, etc. is on the ropes, and each of these companies has borrowed billions of dollars.
This pandemic could easily push several big companies into bankruptcy.
You probably know that old saying– if you owe the bank a million dollars and can’t pay, you have a problem. If you owe the bank a billion dollars and can’t pay, the bank has a problem.
That’s what we’re seeing now.
Countless unemployed individuals, millions of shuttered small businesses, and bankrupt big companies collectively owe the banks trillions of dollars. And many of them can’t pay… which means the entire banking system has a problem.
How much money will the banks lose because of this pandemic?
It could easily end up being hundreds of billions of dollars, even several trillion dollars.
No one knows. But it’s not going to be zero. It’s silly to think that banks are immune to the Corona virus, or to assume that not a single bank is going to run into problems.
Don’t get me wrong– I’m not saying that the banking system is about to collapse. There are stronger banks and weaker banks. Many of them will survive, others will fail.
What I am saying is that there are enormous and obvious risks that threaten the banking system.
As I’ve written several times over the past few weeks: Anyone who says, “No, that’s impossible,” clearly doesn’t have a grasp of what’s happening right now. EVERY scenario is on the table, including severe problems in the banking system.
But the FDIC insists that there’s nothing to worry about.
That’s ridiculous. The FDIC only has $109 billion to insure the entire $13 trillion US banking system. That’s less than 1%!
The FDIC also insists that they’ve always been able to prevent depositors from losing money. “Not a single depositor has lost money since 1933.” And that’s true.
But they’ve never had to deal with this before. Neither the FDIC, nor any bank, has ever had to deal with a complete shutdown of the economy… or potential losses of this magnitude.
The Covid-19 impact on the banking system could be 10x bigger than the housing meltdown in 2008.
If the pandemic ends up causing trillions of dollars of loan losses, the FDIC won’t have enough ammunition to fix it… and that doesn’t even consider trillions of dollars more in potentially toxic derivatives exposure.
So to casually brush off these risks and claim that everything is 100% safe seems incomprehensible.
It also raises an interesting point: why is the FDIC asking us to NOT withdraw our savings?
If the financial system is so safe, it shouldn’t matter to them whether or not people keep their money in the banks.
Yet they still felt the need to specifically ask people to NOT withdraw their money… and tell us that we shouldn’t keep cash at home.
I’ll reiterate a point that we’ve made again and again at Sovereign Man over the years: it makes sense to have some physical cash in an at-home safe.
I’m not suggesting you keep your life’s savings in physical cash. But a month or two worth of expenses won’t hurt.
There’s very little downside– your bank probably only pays you 0.01% anyhow, so it’s not like you will be giving up a ton of interest income.
And given that the FDIC is specifically saying that you shouldn’t do this, a prudent person might wonder what’s really going on.
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“Nothing is confirmed until it is officially denied.” – Otto von Bismarck
Time to hit the ATM “ HARD”
ATM has a $500 per day limit. Time to go cash checks for as much as you are allowed. Tomorrow, day after tomorrow, etc. until you have minimum operating funds in the bank.
Noooooo…You’re doing just what the puppet masters want you to do. They planted the seed and now you’re watering it. Ahhh…but maybe your part of the plan, huh?
When you try and redeposit the cash they will confiscate it under many banking laws restricting cash……The video was there to make people ,grab cash?
You should be doing the same thing the oligarch’s do…..trade FRN’s for real/hard assets.
Just Sayin’
And the 10% the banks are supposed to hold in reserve?
Sounds like it became “inconvenient ” last week.
https://apnews.com/7d62e317d0ca11e265cc79bf5e33ce09
IT WILL RELAX BANKS’ RESERVE AND BUFFER REQUIREMENTS
The Fed said it has dropped its requirement that banks hold cash equal to 10% of their customers’ deposits, thereby allowing banks to lend that money instead. It also said that banks can use additional cash buffers that were imposed after the 2008 financial crisis for lending. This move addresses complaints from many banks that regulatory limits were inhibiting their ability to lend when credit is in high demand.
As of late they can hold 0% in return.
In this case they are right. The banks are insured by the government, and if the government insurance is no good, the paper you have in your hand isn’t either. The last thing we need right now is a physical cash shortage to go along with our toilet paper shortage, because idiot masses panic in mass.
Jdog, I actually agree with you. This country will give $$ out until the…whatever happens.
If you take it out, what are you gonna do with it? I’d imagine some Burning Platformers have $100,000 in the bank. Hell, we got some rich guys here. Maybe a $millions. WTF you gonna do with it?
Cypress? Really? They just handed out, what, $5 T.R.I.L.L I O.N dollarinos?
I don’t think they’ll ever let this bitch implode again. The Dow is up how much in the last 2 days? We get to Dow 30,000 before we go below Dow 18,000.
Arable land, assuming one was smart enough to do intel and relo assessments when they had the time. Even a couple of acres backing up to woodlands would be better than cities and suburbs.
This is not a time to make money. It’s a time to pick your investment vehicle that allows for maximal transition from Point A (USD == world reserve currency) to Point B (SDR? UNO? == world reserve currency).
Fucked if I’d be trying to catch a falling knife, but that’s just me.
I’ll admit, I’ve never been mistaken for a genius.
Wrong…..Bear mkt rallies have crushed generational wealth more times than i can count
en masse
Yeah, how about NO. How about FUCK OFF. How about you go bankrupt like you were supposed to.
This sure makes anyone who saved, has no debt and lived below ones means, feel like a real idiot. But a clear conscience and a healthy dose of schadenfreude may make it just a tad easier to deal with the burn.
Isn’t that the saddest truth.
I think the FDIC should have recruited Hillary, Hunter, and Blago for their PSA.
Oops, too late.
“FRNs” – now literally “filthy lucre” – is CURRENCY, NOT “money” – a store of wealth.
Did she mention if all the banks failed, that they would only be able to cover 1.4% of Americans money that banks hold. Ill take my chances digging holes and making maps.
Yup. You only have to be faster than the slowest dude when running from the bear.
Yea, in the real world, the banks will never fail. Never. The Fed is owned by the banks, and the Fed will not let the banks fail no matter what. The country can fall into complete ruin, but the banks will always remain capitalized. Didn’t you learn that in 2008?
Besides, the entire subject is irrelevant because how do you have a run on the banks when nobody has any fulking savings? Do you think a bunch of people taking $500 out of the bank is going to break them?
There is however a limit to the actual cash in circulation, and you can create a shortage of physical cash, which really doesn’t matter a whole hell of a lot because hardly no one uses it anyway…….. Lot’s of chicken little’s running around, but not a lot of common sense.
You’re right, I forgot. At the dawn of time, when the FDIC was founded as you know (right along with the United States Clan, by President Unga Bunga), the banks have never failed. And of course as you know, an object in motion tends to stay in motion – for eternity. ESPECIALLY who holds the world’s reserve currency. Nope, never changed hands!
Never to mince words, the Chairman of the FDIC wanted to ensure everyone that their money has been and always will be safe…because she obviously doesn’t think a bunch of people pulling out $500 will make a difference.
Hmmm, that pesky thing called Common Sense…
Aww snap, sorry about that. It’s either converted into physical FRNs or physical assets.
Maybe next time, FDICK.
If “they” go digital, that cash in your sock drawer is now useless.
Then convert it to food, clothing, firewood, ammo, or a myriad other useful things while you still can. The FDIC just yelled “BEAR!!!”
This ^^^^^
Beware the man with nothing left to lose.
Gerald Celente states it “ when you lose everything , you lose it “
No, you can convert it into digital tokens, it might be 1/10 the value.
https://www.bis.org/publ/qtrpdf/r_qt2003.pdf
Except for everyone who will still take it.
Not true They would have to give people a chance to deposit that cash
After “they” tax it…
It only makes sense to pull your money out of a bank if there’s a better place to put it, right?
There is, anywhere is better actually Metals, land, etc
All t-bills up to 3 months are now trading with negative yields. That means people will start being charged a monthly fee to keep their money in a savings account. They will “keep it safe for you” but at a price.
What could possibly go wrong. A $3 1/2 trillion deficit this year. We will be looking a 10 trillion before this i over. Obama was a cheapskate.
Every president sets the bar at a new height, and every next president goes out of his way to clear it by a long way.
Go Zimbabwe!
Bwahahahahahahahahahaha . . . hahahahahahahahahahaha… .hahahahaha…. .hahahahaa hahahahahahaaaaa! Hahahahahahahahaha! Hahahahaha! Ha!
The first time I have seen anything like this in a major Australian “newfotainment” rag in 20+ years.
https://www.dailymail.co.uk/news/article-8153433/Coin-dealers-report-huge-increase-people-buying-bullion-coronavirus-pandemic.html
Especially writing about the disconnect between EFT and physical.
PS This newfotainment rag is aimed at the great unwashed masses.
NEWsinFOrmationenterTAINMENT.
When did Yakoff Schmirnoff take over the Fed?
Best bald faced lie of the entire commercial-
“Since 1933 no depositor has lost a penny of FDIC insured funds.”
HAHAHAHA!!!!
In a twisted way he is right, nobody lost a penny, its been a long time since most have given a shit about pennys, they are so prolific.
I pick them off the street daily.
I hope the sugar season was well, and your livestock is well provisioned.
“When did Yakoff Schmirnoff take over the Fed?”
I just laughed my ass off. Thank you, farmer.
Ask hell my bank is limiting any cash you can pull out. I haven’t had access to online banking in over a week and I’m in freaking bfe Iowa where the chance of getting this damn wutang virus is akin to getting hit by lightning. And I still have to work! When do I get my taxpayer paid for month long vacation? And don’t get me started on this bs bill the Senate just passed. If Trump signs it he will lose the heartland and so will republicans. We will set around counting bullets instead of voting in November. It needs to be a clean bill or the swhtf
Where in Iowa if I might ask?
This is just like the video of the women fighting over the toilet paper. Immediately there was a mad dash scramble of everyone to buy up as much as they could all the while the global elites sat back and laughed.
Tell people not to do something and that is exactly what they will do. Duh or calculated??
Banks were so used to getting everyones paychecks deposited and using those checking and savings accounts as their reserves and for high risk trading now everyone is out of work and no deposits. They are in crisis. No deposits and floating billions of derivatives. They will implode, are imploding, as this market is giving them huge margin calls on derivatives. It is coming and soon.
For some reason I didn’t even think about direct deposits. Good point.
I’m sure about two things- the taskmasters can easily confiscate your FRNs, and if you think you can lay claim to land, they can find a creative way to confiscate that too. You are owned. You are a corporate serf. When a corporation wants to lay you off and replace you with a serf from India, they do that too. Any wealth you have is what you are allowed to have. Any control you have over how you live is just an illusion. Any attempt to gain control is typically squashed. That is because most people are willing to be sheep and have someone provide things for them. Uncle Sam is Uncle Sugar. If you wanted freedom, you would not tolerate handouts for Medical care, Socialist Security, Welfare, Section 8, and every other pork-barrel that exists. That being said, you are limited to the confines of the system you are a part of.
Thanks, but I’ll keep my money in food, ammo and cleaning supplies.
I take this video message as a veiled hint a bank holiday might be in the offing and bank liquidity is a serious problem because there have been quite a few large withdrawals in the system. We may be in a quiet “eye of the storm” phase right now. When the stock markets take another big downside hit I expect a few bank runs.