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M2 Update: 14th Consecutive Weekly Increase Even As Main Street Accelerates Cash Withdrawal From Banks
The only thing mirroring the relentless outflow from stocks these days (now in their 23rd week) is the increase in the M2 money supply: the week ending October 4th was the 14th consecutive weekly increase in the broadest money aggregate compiled by the Fed which hit $8,752.4 billion, an increase of $20 billion from the $8,732.8 billion the week before. Curiously, the Fed decided to massively revise all previous numbers (as if the amount of money that goes in and out of a bank, and should be recorded electronically the second it happens is subject to change). Yet the strangest number to come out of the huge revision had to do with with the flow of money in and out of Small Denomination (under $100,000) time deposits, or in other words the place where the bulk of Main Street America parks their money for some pursuit of nominal yield. The kicker - since the beginning of the year there has not been one weekly inflow into small denomination time deposits! (go ahead and check it) It appears either the less than richest Americans need to constantly pull money out of the bank, as they give up yield (and in a Zero Interest Rate environment there is no yield to be given up) in order to pay their bills, or simply have decided to no longer keep their money with the big (and small) banks (as this includes both commercial banks and thrifts). Could the "starve the banks: campaign be working? If Americans succeed in pulling enough money from their banks via deposit redemption, coupled with the stock trading boycott, it will be the end of Wall Street post haste.
Some charts: total M1 and M2 spread by component.
Just looking at the M2 (Seasonally Adjusted):
And the weekly change in various M1 and M2 components. Note the endless weekly outflow in the abovementioned pink category: Total Small Denomination Time Deposits. The only thing that offsets this outflow is the weekly increase in Savings Deposits at Commercial Banks. Yet this is odd, as there is no incremental yield to be picked up by moving from a time deposit to a saving account. Unless this is where Americans park their money having sold Apple at $300+, desperate for a few basis points in incremental interests.
And back to the key observation on Small Denomination Time Deposits: the category which peaked at $1,460 billion in December of 2008 is now down by nearly half a trillion to $978 billion. It has not had one weekly inflow in 2010! The Fed, in coordination with various campaigns to take money away from the banks, have succeeded in depleting one of the key sources of liquidity for the banking cartel. Should savings deposits follow suit, and see a declining inflection point, it will be all over for Wall Street, which will soon be left relying exclusively on Excess Reserves and the Discount Window to fund itself.
Note the dramatic drop off in the chart below (source: St Louis Fed)
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It would be interesting to see that last chart inflation adjusted. I'm thinking it would look even worse...
Not really? Drop off only the last 12-18 months or so, the adjustment would be negligible. If anything it would look less severe as the previous swings would be magnified...
Right now, it looks like we are headed into one of those troughs, which is fairly normal. Adjusted for inflation, we are going into the deepest trough on that chart. In fact, that last peak on the chart corresponds to the same value as the 1984 low.
Inflation adjusted, it looks like it is in a very clear, and rapidly accelerating downtrend, and that's the OFFICIAL statistics.
'starve the banks' could work, as long as there are no real estate deals for them to create money from. along with the simultanous exodus from digital to physical cash, and no contracts to create money from, more banks will suffer and collapse.
but it could be playing into the grand scheme of consuming the smaller banks into larger ones; the elitist agenda of bank consolidation under singular control; for god knows what sinister purpose..
i suspect to initiate the 3 shadows.....
its already in europe. these folks are toothless and conquered by the same bankers that own the US political process. no guns, no heroes on currency, no nationalism; just subjugation to the number of the beast. and a special digital microchip only for them.... so they cant buy and sell without it.
the flimsy piece of paper known as the euro has nice architechtural pictures on it, but, of course, no images of heroes. wonder why that is? perhaps the powers that be want them to forget their creed and become part of the unity of nations.. under the jurisdiction of a few, powerful men?
sound familiar?
america is under siege, and only a handful of rag-tag armed libertarians stand in their way. the new era of heroes is upon us, and it will be 'the awakened' that will rise to the righteous battle thats been fought for 1000's of years...
thought i saw this in a movie somewhere.
I could be just simple minded, but could this not simply reflect people draining their savings in order just to live? Unemployment checks, even for 99 weeks, ain't what they're cracked up to be.
It's down by a third, though. That seems like too much to be explained by simple drawdowns by the unemployed, even if they had drained 100% of their accounts and spent the money.
Something else is going on here, we just can't be sure what. If a significant number of people think like I think, they might be drawing down banks savings to get prepared for systemic breakdown of some sort. This seems like it would be a best case scenario in the long term, as having a third of the country prepared for a disaster like the one that is coming will mean that we can avoid zombie hoards for the most part. I, for example, could employ ten people and feed them for several months with the food I have on hand, and that says nothing of what's in my money bin.
Tmosley: This may be true of people who have savings, I'am seeing alot of people who don't have two dimes to rub together. The folks coming into the ER are showing a whole new level of beatdown.
Agreed. IMHO, people are "abandoning" the system. Boomers are pulling out. With no yields, there's no penalty to simply keeping it "under the mattress". People don't trust banks -- there were runs last year, and any idiot knows there will be runs again (the FDIC is broke, etc.)
Further, it's not worth the arbitrage to have-debts-and-money-in-the-bank. It's safer to pay debts off, and risk-adjusted, debt payoff is very profitable. That's deflationary, and consistent with these withdrawals. (Why have a car loan at 5% when you earn nothing on your savings?)
Finally, the "abandoning" includes equity shift to PMs and anything else. That's also deflationary, like debt payback (the banks don't have user account balances to leverage). People are happy to have no assets "on paper" at the bank when they have basements of stuff they want (food, PMs, whatever).
The system is breaking down. It is betrayal caught-up to the layperson (they don't trust government nor the banking system).
From the article:
The reality is that the Wall Street model fundamentally does not work (anymore). The model merely implied leverage and capital mis-allocation; But, people played, because they got in on the "ground floor". Big players didn't mind paying, because even though they knew it was corrupt, that's how you made money. Even though people knew Madoff was running a ponzi, they chose to play in favour of that payoff.
Not anymore.
What people don't fully understand (yet) is that the business model fundamentally does not exist, and it is not coming back. These Wall Street jobs will go away, and they won't come back (because they serve no purpose, and much of their activities will *finally* be made illegal).
sadly mistaken. "Wall Street is providing the greatest purpose of all." They're paying all the taxes. More importantly, Tyler "you do not specifiy the banks" but "speak in over-arching generalities on this subject" which is surprising given the specficity and I would argue outright accuracy of your numbers. In short, "who really is paying the price of all this"? With QE 2 and "no explanation from the Fed now that recovery is underway and the yield curve has never been steeper and is clearly going even steeper why this is necessary" I think the real purpose is not only perfectly clear but more to the point now an "academic" excercise and I DO CHALLENGE YOU TO PROVE ME WRONG. The purpose of QE is and always has been to bail out GOVERNMENT and not "the banks" save for certain "precious ones" of course. Insofar as it being "legal" of course I am 1,000,000,000,000 percent in agreement with ZH on that one.
Bank Alert: My bank has changed 6 x since the 70's. The last change is Wachovia to Wells Fargo. So, being a customer since 1970 to present. Never bouncing a check and credit in great standing I got the shocker. I have a standing 5k balance in checking acc. and a average of higher. I went to cash a check from Scottrade for 10,000 in cash. I was told I would have to wait for it to clear. I said, "Oh really, Why?" No answer, just has to be. So I said: "O.K. I'll be back in three days to get the cash. 2nd Shocker: They said: "No, you won't be able to get it then either. It will take a week for us to get that much ordered and we only order cash on Fridays" Bottom line, they get to hold the cash for about 10 to 12 business days before I can recieve my money. Something tells me there is going to be a bank holiday soon. I plan to do this all again for 15k just to protect myself. I'll just put it in my safe deposit box with my gold and silver. Screw them.
Banking holidays include locking you out of your safe deposit box.
Buy a strong safe, hide it in the house, buy a welding blanket, cover your PM's and cash, put it in the safe and sleep well.
These blankets are good to 1800 degrees F. http://www.steelguardsafety.com/welding-blankets.htm?gclid=CNfn1dDe_qMCFVw65QoddB-bLA pick the white spark silica cloth.
Also invest in Mr. Smith & Mr. Wesson, or Mr. Remington to give you a helping hand!
Meow! Also, don't forget to invest in us cats.
-'Cause we are good at catching rats, and when Bernanke's dollars hits the fan, you are going to need as many of us as you can get!
Golden Emerods Bitchez!
Speaking of Mr. Smith and Mr. Wesson, I think the common here is a very good value @ 3.70 a share? I have traded SWHC off and on for several years. I now think it may be a longer hold?
It's best to take delivery
Taking gold down down down. - $ 10.08
http://www.chartseeker.com/images/AU-24HR-LG.png?r=151144099760.3023
rocker,
This is normal op procedure.
Had you had enough in the bank to cover, they would have cashed it for you.
I also asked my bank if I wanted to W/D, say $50k, how long would it take to get it?.
They also told me 3-4 days, as they only ordered cash 2x's a week.
Other than that, no problems.
STRONG suggestion:
Remove PM's and do not store then in a SD Box, nor cash..
IF there's a Bank Holiday, a day or 3 months....your SOL.
Plus, what's in your SD Box, is not insured, and can & will be seized by the goonies(if they so desired).
Plus, SD Boxes are subject to theft by employees as well..............once gone, you SOL.
You can get Insurance for it, thru your Home carrier............. may be costly.
One more thing, ASK your Bank if it's legal for you to keep cash in your SD Box IF you wished.
Some places it is not.
@rocker: If you are withdrawing money from the bank in cash, you better damn well be withdrawing it in low denomination bills. When Russia collapsed, the $100 and $50 Ruble notes were made worthess overnight AFTER A YEAR OF GOVERNMENT PREPARATION FOR THE EVENT:
http://articles.latimes.com/1991-01-24/news/mn-987_1_savings-bank
http://articles.latimes.com/1993-07-25/news/mn-16831_1
I see what you're saying, but let us not forget that people collecting unemployment do not include 1099 contractors now out of work. In addition, there are all the individually held small businesses (whether sole proprietors or corps/LLC's) whose owners are extremely stressed. That would support the possiblity of a whole lot of these liquidations being less benign than "The Great Deleveraging," investment in PM's, or mattress stuffing.
"owners are the only ones collecting unemployment now"? that's interesting.
Please read again. Cited "owners" added to the previously mentioned group that does not receive unemployment payments. Just looking for the missing groups. Gold bugs don't cut it. Very big number.
"The Great Deleveraging," investment in PM's, or mattress stuffing.
Let's hope that the above is what's occuring.
I do not see it though,the sheeple are so USED to the USD beong safe, they will not risk taking them out of the system for saftey.not realizing, they are losing 5-6% per mo on their cash,thru devaluation.
When every bubble pops you have winners and you have losers. The initial drop is from those who lost their savings, lost 30% equity in their homes or saw a huge hit to their 401k's. Now what you're seeing is the drop from the winners of the bubble. Those would be the people that sold out at the peak of the market and had a big cushion of cash to live off and keep the economy stimulated. Now 3 years later that cushion is drying up faster then they can blink an eye at. Soon we will have the winners and the losers with nothing so expect the chart to continue its downward fall.
I personally consider myself in the minority regarding a deeper understanding of what is going on and where we might be headed (thanks in part to ZH of course). I have been slowly withdrawing some savings in the event of a bank crisis - outside of (before) a hyperinflationary blow off. Maybe this minority isn't so small after all - or at least in the practice of at least "feeling the disturbance in the force!" Just thinking... and offer some anecdotal evidence here.
So, how long until the Fed discontinues the reporting of M2 (in the interest of the public, of course)?
How long before IRA's, and 401k's, are seized?.
My $$ is soon, on that issue, those that have, and want to control it, best take the hits, and at least control what's left.
The wording I heard, was a 40% hit, back to Sammy, when you pass, so your kids would be screwed.
We recieved a letter a few days ago saying our employer has incorrectly and illegally contributed too much money into the 401k fund. Therefore the sum of money has been removed from the 401k, cancled, no action needed by the employee and no tax penalty. Only the employer now has to decide what to do. Pay check for the money next payroll or skip it and eat the penalty for over contribution which probably will be cheaper anyway.
The 401k we thought we had as of last quarter has been reduced about 40%. This combined with the removal of the 100% vested after two years to 20% vested each year worked with a maximum cash payout of 5000 dollars (Anything over goes automatic annuity at 65 years old)
So the effective 401k cash out should we quit today will be about 15% of what we thought we had and we will be paying penalties at tax time next year greater than the amount recieved.
As far as banks are concerned. I can get several thousand dollars in twenties on demand on Tuesday morning right after the Armored Truck arrives at a certain specific time on the dot. Or I can get that same sum of money on friday afternoon around 1 PM after the armored truck arrived and left.
But normally that bank is strictly a paycheck cashing service with excess funds wired by fed wire to another bank which holds the real bed rock of our finances. If that bank implodes let's say there will be a armed insurrection throughout the United States because it is one of the banks that serves the entire DOD.
The day I stopped using FDIC banks was when the bank could not satisfy my demand for 800 dollars total cash withdrawl out of a checking account that contained 1000 dollars. I had to wait for 45 minutes as a special truck delivered the money to the branch I was at.
I then proceeded to have the manager start closing all the accounts, closing all the cards, close the ATM and close the safedeposit too.
We bought a safe and had it installed at home with weapons to defend ourselfs and the safe. We are our own bank now.
Learn your bank's Armored Trucks Schedule. Sit NEAR your bank 8 to 6 PM if necessary for several weeks but far enough away to see the truck pull in and leave. Note the days of week and times.
After about three boring and tiresome weeks, you will have a reliable schedule of your specific bank's armored truck delivery and then can begin to visit the bank in person as one of the first people to cash a pay check or make a withdrawl with large sums of cash.
Hey Tyler-
Why don't you take the weekend off? I think you deserve it.
I'm left wondering where the money is going. First Bank of Serta? Ammo?
First Bank of Serta?
Bedbugs.
The banking system sould be regarded nowadays as a criminal system, and letting money sleep in a bank account is just like financing Don Morello's operations in Lost Heaven. I hope ZH readers don't have a single penny left in banks. They will lose it anyway.
Lets apply some Conan-Doyle to this.
Once you have eliminated the impossible, what you have left, however improbable, must be true.
The markets are claimed to discount the future. The banks are supposed to be solvent, but are getting TARP etc etc etc. MBS, CDO etc etc etc have been shown to be underwater/fraudulent/of no legal standing. The Government deficit is unsustainable and unpayable.
Etc etc etc...
Therefore, if smart bankers/accountants/market analysts are calculating anything other than that the banking system is an instant Zero - and the markets are pricing themselves as anything other than Zero.
Then the whole system is a criminal conspiracy.
Ergo Sum
I'm wondering what percentage of "real economic activity" can migrate to the black market before a collapse.
Off-the-books nation, yo.
Works pretty well for Greece. Productive people stay off the grid and the moochers collect welfare.
Stretch that system to its limit and beyond, and you will see real justice appear once again in the world.
Yeah, Greece is doing great.
Have respect for tmosley's wisdom.
Think about the last sentance.
When this system is stretched to its limit, the welfare recipients will wind up starving to death, while the people who are productive continue to keep everything that they make. This is justice.
sorry to spoil your productivity party, but we will see a redefinition of the same. and the diminishing returns to specialisation will show us which productivity will be in demand and which will only be craps. i think most specialists will find themselves in a world they are not equipped for. while the ones trained in day to day survival will just do fine. nothing will change for them when forced lifestyle downsize begins :-) you will see the true meaning of justice in your lifetime and i suppose you will not like it
you will see the true meaning of justice in your lifetime and i suppose you will not like it
He's looking forward to it as am I.
You ignored the premise of the argument, which was that those who actually made things went into the underground economy, while those who didn't remained in the above ground economy. Once all the producers left, the underground economy would thrive, while those confined to the above ground economy (welfare recipients and government workers) would starve, and rightfully so.
This is not necessarily what will happen. If the underground economy remains small, then the destruction of the above ground economy will do enormous damage to everyone, as you posit. If people fail to enter the underground economy fully, then justice WILL NOT materialize, which will result in nothing but destruction.
Happily, I can report that the underground economy in my own local is fairly strong, and growing fast.
I get it now. If you're not a subsistence farmer or do not sell your goods/services to a surplus farmer, you're part of the problem. Thanks for clearing that up.
I guess you never worked for money under the table before.
The underground economy extends far, FAR beyond the realm of farming. Never been to a garage sale or flea market either, I presume. Not to much income reporting going on at those places. Take that to Greek levels, and you have undocumented shipbuilders and factories.
Geez. Why don't you stop trying to shove words down other people's throats? I made it quite clear that I was talking about welfare recipients and government workers, not "anyone that isn't a farmer or trades with a farmer". I said as much.
I'm not shoving anything anywhere--that's not my thing.
YOU said it works well in Greece. YOU said welfare recipients and government workers will starve.
But seriously--if you're not producing your own food and your complex and interrelated economy goes into collapse, YOU TOO will starve unless you can trade your goods/services with the people who actually produce food.
Personally, I think your perspective is absurdly simplistic and somewhat hateful, but I don't really disagree with the premise that if you want to eat, you should produce, nor do I disagree that there are far too many people in non-productive positions that aren't worth their salaries. This is not limited to welfare recipients or government workers. Not by a long shot.
I'm prepared to run away to the hills and trap my own dinner. My line of work is computer repair, and that's not going to be in very high demand if we hit the Mad Max scenario you seem to envision.
My point is that unless you are functioning at the most foundational levels of an agrarian society, you're not in much better shape than a "systems analyst." So don't break your arm patting yourself on the back for all your "productivity" and "self-reliance."
NO ONE can do it all. That's why we hairless apes formed societies in the first place.
Obviously, you've never read Walden.
Is that the survivalist fantasy these days? 18th century hard-labor? One person might be able to survive awhile in a primeval forest with no competition and good health.
I didn't read the whole thing, no, but made my way through a good chunk of it. Thoreau sure was impressed with himself, too.
It's true that if you want to ratchet your quality of life down low enough, you can "survive" a lot. Keep your heart beating, anyway. Pull your own teeth with pliers, run a real risk of dying to a staph infection, and completely abandon any desire to learn anything new.
If it comes to that, I'm really going to miss air-conditioning. But that's a personal matter.
it's a very simple form of it i would agree. the military might have some "issues with it."
Meow! Well, you could always treat us cats nicely,
and who knows what we will do for you!
:)
A better question would be "What percentage of the economy can the government and oligarchs pillage before a collapse?" Things go black market to try to escape the pillage.
Charles Hugh Smith at oftwominds wrote a decent piece last year on the end of paying work and the emergence of the black market economy
http://www.oftwominds.com/blogjan09/endgame-work01-09.html
I'm doing my share 100%. FTB is the cry that will free the slaves.
Does the small denomination number include credit unions? That's where our cash is stored, except for that under the mattress. Starve the beast and it will die.
Unforunately yes................
Thay are also insued by a different arm of the FDIC.
WE have no stored cash,we have stored DIGITS.
That's why if you go to your CU, or Bank, and ask for an amount in cash in excess of 10K, you would be extremely lucky to get it.
You see, their using your say, $50,000k, to loan at 9-1 leverage.........
For every ONE you put in, they loan out Nine.
As in previous posts, they are loaning your CREDITS (Digits), free of charge to you (save maybe 1% or less) x's 9, at whatever the going LOAN rates are for loans to others.
I've read this several times, and I just don't think it's true. I live in a foreign country, and I periodically need money for living expenses. I usually go to my bank in America and withdraw cash in amounts close to $10K and just carry the dollars back home to convert to the local currency. This is often cheaper and easier (not to mention more private) than cross-border banking transactions. I have never had any problem whatsoever at my bank getting the cash, even in the last days when it was Washington Mutual and there were long queues out the door. And it's not even a main office - just a small branch located inside a supermarket. It's true that this is not "in excess of $10K" (which I avoid mainly due to declaration requirements) but nothing at all suggests to me that it would be problemtic to withdraw larger amounts. They'll give me $9K but balk at $12K? I doubt it. Quite frankly, I think this is nothing more than rumor-mongering by people who (perhaps justifiably) would like to see a collapse of the current banking regime.
Small Time Depositors vs Big Swinging Dicks.
Where is Lorena Bobbitt when we need her?
http://www.trutv.com/library/crime/criminal_mind/sexual_assault/severed_...
ACCOUNTS RECIEVABLE. Is a big problem for small business now and may be part of the cash draw down. Most politicians/Federal Banksters do not have the background to understand this shadow credit structure.
Most big business wants to pay the little guy in 90 days. However, with the depression, big business has tightened its demand for accounts receivable payment. From 30 days to COD makes a big deal in the cash flow department. 60 days to 30 days has the same impact.
The bank will not loan out the float money.
To illustrate micro economics just east of Ft. Worth, Tx, a small steel builder has ongoing work and is bidding on work. A project that may take 3 weeks (if the weather does not go bad) has labor and material costs for part or all of the building and then hopes he gets paid in 30 days. Assuming a late delivery or getting rained out for a couple of days, he has 2 months of his money tied up. The bank will not float him. The savings and other assets now need to fill in for what he used to get from the bank.
Because the economy is dry, the extra cash he used to have in the business is also dried up.
His small business is being chocked off because of inability to get small loans for a short periods of time. In that small business hires more than 80% of the labor force, unemployment will go up and not down if this is not corrected.
+1, very good point.
Further, this is also what we see in "liquidation": When the small business owner says, "screw it!" (due to bad business climate, uncertainty regarding future liabilities, taxes, and costs), and this "liquidation" is deflationary.
Shut down all assets, pay off what liabilities you can, close the business. Grab something so you can buy food (if you can).
People will look back on the "small business shutdown" in the 2008-???? period and be *amazed* at the number that simply "disappeared". These levels are absolutely unprecedented.
We don't really talk about them now because of the fraudulent BLS statistics that attempt to hide the number, but we can all see the empty buildings for lease and have first-hand knowledge of small business owners in bankruptcy, or merely quitting because they can't make it work.
No new houses=no contractor work=i shut down after 30 years in drywall business.Ripped out the driveway and planted veggies. Sold truck and invested in silver and my community. Disconnected from all ties to government and lowered my visible profile. Barefoot most days and feel freer than i have in a long time. No appointments,expectations and the only stress is the worry for the masses who fail to see the coming tsunamy of pain.
I like Mosley also
merehuman is a head of the curve...
Don't forget dwarf and semi dwarf fruit trees. They will produce the first season...
Citrus down the southside of the house... peaches and cherry in the back... Don't forget a walnut or almond...
I planted two dwarf cherry trees in 2001. I live in PA and these trees are in the yard behind my house which receives only about six hours of sunlight per day. Within five years the pair was producing over thirty quarts of cherries each year (and the birds get their share, too). So many I can't pick them all. The cherries ripen in mid-June which is a great boon as few other crops are ripe at that time.
Live on an island in the Pacific north-west. Tight knit community. Everybody knows and helps everybody else. Farm and fish with some lumbering. Sell product for CASH ONLY. Take tourists out (by word of mouth) to catch that big salmon. Payment in cash. Hunting season coming up, time to replenish the venison. Buy PMs when possible with cash and in person. NO paper work please! Don't need the services of any stinkin bank! Okay gotta go and finish laying up the Winter's fire wood supply. Got some extra to sell to. CASH ONLY! Will deliver for a small fee. Cash.
Is junk silver included in that cash option?
Very, very true. My customer base is a combination of Main St and major corps. 15 years ago, my rep agency had over 2,000 accounts. Today, it is less than 200. There were 16 people in the company; now only 3. We sell consumer goods to retailers - fromMom & Pops to Dollar General to Belk & Stein Mart. 2 years ago, I let my showroom lease in America's Mart expire and moved out. I was an original tenant. Last year, we moved from 6K sq ft of office space to 750, and 1/1/11, my partner will retire and I will move the office to my home.
We represent more than 20 factories & import companies. I made my first visit to China in 1992, so I am pretty familiar with the big picture. The small business owner has been twisting in the wind for some time - getting killed by huge international competitors, bled by financial interests, and strangled by rules and regulations that ad expense and time to their already stretched budgets and schedules.
Now, there is tremendous uncertainty regarding demand and the sheer ability to carry on from season to season. Credit lines cut, store traffic down, margins under pressure, increasing regulation, rising health care costs...so is it any surprise that so many are just folding up the tent and walking away as leases expire?
Me personally, I have re-invested for 2 years while smoking hopium, confident that things would turn around for us. It has to some degree, & with minimal expenses and creative accounting, I will be fine. But, I am doing all I can to become invisible and minimal, leaving a small a footprint as possible in all that I do. My only prayers for myself are for good health so I can guide my family through this as safely as possible.
I don't care what anyone says - this all revolves around DEMAND. There is a fundamental shift going on with consumers. I have been watching it take hold from ground level for more than a decade now. The priorities are shifting in the way they spend and save. As always, there are winners and losers, but in this case, far more losers. Our "consumer society" is not going to be like it was & you can take that to the bank...if you still use one ;~)
Thank you for your first hand experience. It is wisdom like yours that makes me hopeful that we will rebuild when needed. I look to people like you to provide the weather vane of information so desperately needed to survive.
Appreciate the acknowledgement, RR.
I could write a book on this, having started in retail in 1963 during high school and never moving away from it, with the exception of a little detour compliments of the US Army. For more than 30 years, I've served as the middleman between factory/importer & retailer/wholesaler, watching as decision after decision by government favored the largest, most powerful retailers to the detriment of the little guy. We have worshiped at the shrine of "efficiency" and "low cost" while forgetting about quality of life and obligations to country and our fellow citizens as we shipped our jobs to foreign countries and gutted our middle class, along with our tax base.
During this time, my travel schedule has been steady and extensive - to big cities around the country and small towns throughout the Southeast. As noted in the earlier post, I traveled the Orient beginning in '92, as so much product started to be sourced there. Sadly, I broker millions of $'s of Chinese goods every year with no personal pleasure.What has happened to our communities, our manufacturing base, and our jobs situation is criminal.
Independent Contractor
I'll look forward to further comments. I've posted a lot of my history on the pages of ZH and will probably again!
I am 51 and been going off grid as hard a possible since 1986. Wake up the hour is late. So far my Children are debt free and 2 are still in college debt free. The mark is in the forehead.
http://mises.org/Books/humanaction.pdf
BURN RATE
judging by the sign it would appear you "violate the prosecutors."
Or, the HAND.
Why leave your money in an insolvent bank that pays no interest? Believe it or not, the average Joe is starting to figure this out. Put it under the mattress, a Treasuries only money market mutual fund, Treasury Direct, whole life, or buy PM. There are some solid Mutual Life Insurance companies that have much better balance sheets than banks. People have options. Personally, I think it is stupid to leave anything in a bank because its just a matter of time before the "bank holidays" start. I mean, who hasn't figured out that the banks are just an extension of the USG? Personal privacy and all!
If you want to look to numbers like these, you also need the top 20% of the richest of the rich. And mostyl they show the trends.
And what you'll see is that money is leaving the country as expected 2 years ago.
What did you expect when you want to tax everything in a country run by a fascist president? You park at least half of you money where the gov. hands can't touch it. And you don't do it all at once to avoid being caught.
To bad Americans are pariahs to international banks, thanks to our criminal government. I suppose one could buy a passport and bank as a citizen of St. Kitts or Dominica, but that is outside of the price range of most Americans. I know if I had the big bucks I would be getting them out of this system. It was teetering before and now that the MBS bomb set to go off on balance sheets, it's going to be TARP2 or bust for the to big to jail.
2 years ago? 2 years ago, my big old butt. It's been going on for 30 years, and the political class has done nothing but primed the pump everytime the elites wanted another drink. You really think another set of party ass wipes will change anything?
Damn good! Some folks just can't see past the party politics.
I don't know if this has anything to do with why the time deposits are shrinking but my credit union sent me a letter when my CD matured in August stating that they no longer offered time deposits other than IRA's shorter than 3 or 5 years. Instead of rolling over, my money was transferred to my share account and it was over the 100k amount. This told me that they no longer needed my money so I withdrew it and deposited the money in another bank. Not a word was said too me about keeping it in their bank which I thought was unusual. And I know these guys have tons of soured loans on their books.
My advice to you , is to take that 100k and bet the whole wad on physical junk silver. Now make no mistake about it. They will laugh at you and call you stupid but do this and you will be glad you did , very soon. In my opinion, these days, it is extremely important that all frn's are converted to hard assets of some type, preferably imho, also , PM's . In this day and time, how can anyone trust anyone with their money?
I have already invested in PM's and thought about buying foreclosed property. I was waiting for the governments tax credit to expire and thinking the prices would start falling again. Now we have this robosigning fiasco so I'm not sure this is the right time or not.
The one thing I do know for sure is it will not be going into the stock market. I converted my IRAs to CD's before Bear Sterns collapsed and that money will sit there until the FED quits their bullshit.
I know it sounds kind of crazy but if you remember Marc Faber was talking about people needing to buy arable farm land. I think farm land is a great asset. Having a place to go to if the stuff hits the fan and being able to raise your own food.
Much of the new housing stock is built on what used to be arable farm land.
We'll see amber waves of grain on the homes' graves soon.
yes we will rock. and as long as the ground hasn't been contaminated, that soil is probably mad fertile by now. only question (and it's a big one) is: who will control the land?
plus there is mass oil in those asphalt streets
The house of cards will collapse incrementally. IMHO, deflation will persist for sometime before the politicos are desperate enough to take the hyperinflation route. There are still too many takers of T-bills and "trust" from T-bill holders. I'm waiting for RE to drop to 1999 - 2001 prices and the S&P dividend yield to go over 6% at a minimum. "Keep your powder dry" is my motto for now.
It would seem so easy to accomplish. If everyone would go to their banks and withdraw all of their monies, the entire system would crash immediately.
Problem is: not everyone would be able to withdraw all of their money, even the 250K 'guaranteed' amount.
Banks don't have the cash?
You ARE kidding right?
I suspect that it is largely withdrawals in order to make ends meet. About two months ago there was a report that pensions funds were being drawn down by around 10% by people taking loans against them. I wish it were more a matter of people recognizing a systemic crisis coming and protecting themselves ... and I suspect that number is increasing but I know of few people doing that yet. Maybe the massive mortgage mess may be a tipping point.
Until 9-11 people couldnt imagine an actual attack on US soil, and when it hapened, the principal response was not to try to understand why it hapened.
It probably with take a bank holiday to convince people and then it will be too late for most.
Are the Americans finally going into withdrawal :) from their debt habbit ?
Why do i have the feeling this isnt going to affect the stock market? Bernanke has the answer to everything. Just print money. It reminds me of Paulie from Goodfellas, " Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. Place got hit by lightning, huh? Fuck you, pay me"
Tyler,
Has Zerohedge looked into this one ?
I found this on a blog
Just got off the phone with a buddy of mine who supplements his primary income pretty significantly by trading FOREX. In fact, he's been talking for the last year or so about leaving his current career and becoming a full-time trader.So, today he told me that he's been shorting the dollar against the euro for the last few weeks (no-brainer), and that going into friday he had an open trade that was up about 140 "pips". His plan was to let it ride through the weekend.
Unfortunately, he'd misinterpreted some of the finer points of the recent FINREG law. Apparently, one of the provisions of that law took effect Friday. This provision restricts (essentially prohibits) US FOREX traders from operating through foreign brokers. My friend trades through a broker in the UK. So friday morning, he got an email from his broker saying that his open short trade against the USD had been cancelled. So a potentially big gain for my friend was wiped off the books.
Now first, I should emphasize that this is anecdotal. I haven't taken the time yet to investigate the regulation in question. I'm simply restating the situation per my conversation with my friend. But if this is true (and I've got no reason to think that it's not) then a bunch of FOREX traders who've been betting against the USD closed their positions friday, or had them closed involuntarily. This could very well be the root cause of the dollar's sudden rise on Friday and PMs' relative drop.
The question is, how long lasting will this impact be? How long will it take those investors to move their trades to US-based brokers and re-open their positions? Gonna have to meditate on this for a bit while I knock out my sunday chores. But since next week's prospects are an ongoing conversation this morning, I figure I'd throw this out there for everyone's consideration.
ETA: Reference link below
http://forexmagnates.com/fxcm-is-shi...nts-back-home/
When will accounts for US residents be repatriated back to the United States?
All forex accounts for US residents trading overseas will be repatriated back to the US by October 18, 2010.
For US residents with FXCM UK, the switch back to FXCM US will most likely occur the weekend of October 15. The switch will occur over the weekend so that there is no disruption to your trading. The existing username and password you use to login to your account will also remain the same. US residents will receive information very early next week by email confirming the timeline.
This would confirm what my friend had told me. "No disruption" my ass.
Wow, great post. Thanks for the information.
I strongly suggest this that have not, MOVE you cah offshore, and convert it.
NOT inn Western Banks, esp the U.K., they make us look like a Constitutional Republic!.
How anyone can live there, under their banking, and fiscal restaints, and spying is beyond me.
Worse than here now, but not for long.
If you look at the graph of the amount of deposits you can see that after every recession the amount drops back down to the amount before the run up in savings. I would guess if you plotted the employment rate on the same graph you would just see how the amount of deposits is correlated with the amount of employment. Which says people are taking their money out to pay bills. It may be worse this time because their credit cards are maxed out, or they don't want to increase their amount of debt.
From what I can tell, the last 18 months has been a period where we have seen once in a lifetime gains in stocks.
Too bad Joe Six has been pulling out. Because those with money are making fantastic gains on equities.
I've never seen so many 5 baggers in such a short period of time.
And the cosmic joke is that most of the biggest gains have come from consumer and deep cyclical stocks.
LOL....
Any wonder why the PigMen are getting filthy rich and riding herd on beautiful women?
Bears, nay-sayers and perma-gloomers must be aghast at the lost opportunity of being out of stocks the last 18 months.
Even though I was 100% in, I lost about 25% in the 'Greates Bull' of all time LOL
Same thing happened to a friend of mine.
It would appear that "bears, nay-sayers and perma-gloomers" as well as everyone else couldn't give a rat's ass about not participating in the biggest hot granade juggling contest in the history of the world.
I've had a good year so far, even though I've lost my butt a few times trying stuff on the short side.
However, I have to admit, I seriously screwed up by not staying with my winners longer. But I'm not complaining. I'm happy to keep hitting singles and doubles for now, and not get too greedy.
Just staying on the right side of the market was a game changer for me a couple years ago.
So, Robo, what's your return over the last 12 months? If it's less than 30%, you're a loser.
I seriously doubt you beat the market if you are in stocks, given high correlations.
-- 52W: Au up 30%; Ag up 40% http://www.24hgold.com/english/home.aspx
-- S&P500 down Mar 09 to date, priced in Ag:
http://www.theundergroundinvestor.com/2010/10/why-30-gains-in-western-stock-markets-will-become-meaningless-in-the-future/
consider this robo from honestann:
When you LOSE wealth in term of actual value (approximated by the average of the above gold and silver charts), but sell for more dollars than you spent to purchase the assets in question, the taxman steals even more of your wealth.
Thus, in fact you've had a capital loss, but they deem it a capital gain... and tax you on the fictional (non-existent) gain.
http://www.zerohedge.com/article/when-pigs-can-fly-devil-shivers-hell-an...
my friend, you're getting played like the rest of us and you're contributing to a system that i know you have complete & utter disdain & disgust for. again, no blame & no shame to you for being on the right side, but when the right side is the wrong side, there comes a time when it's wrong to be right. i wish you the wisdom to know when that time is for you and the courage to act when it does.
"Flag as gold"
Tyler minces no words...
http://mises.org/images4/ZimbabweIndustrialIndex.jpg
(from http://mises.org/daily/2532)
"And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return! "
Meanwhile, the war on deflation continues unabated:
Bank of England stepping up stimulus
http://noir.bloomberg.com/apps/news?pid=20601087&sid=azL9eF.5_2hw&pos=4
Trichet pushing for more bond purchases
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aBF1CokgQqes&pos=1
Regional Fed heads want to push harder on the inflation accelerator
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aEfo.ZH1ylBU&pos=2
Very hard to fight City Hall these days when they want asset prices levitated.
Yeah, and it's about as valid and necessary as the so-called "War on Terror" --- and will have the same level of disastrous and counterproductive consequences. And if one thinks that either "war" is just the result of "ignorance" or "good ambitions gone bad", then one is a naive fool.
Every time the US government has declared "war" in the last six decades, the resulting war seems invariably to be fought against its own subjects (i.e., citizens), and against their freedoms and prosperity:
"The War on Poverty" (more of it now than ever)
"The War on Inflation" (takes a licking, and keeps on ticking)
"The War on Drugs" (face it, drugs won)
"The War on Terror(ism)" (yeah, let's invade and indefinitely occupy even more nations --- THAT is guaranteed to make them love us!)
And now the "War on Deflation". This one, though, I think they will actually win --- and a disastrous "win" it will be.
Nobody's fighting city hall.. everybody's thumbing their nose at city hall, walking away from their debts, living mortgage-free for years, moving back into foreclosed houses, making up their own laws... signs of the times. The authorities have lost control.
in what kind of bizaro world do central banks, led by the Fed, work so hard to generate inflation. The chances of them getting this fine tuning right are very very low indeed.
Looking at the small time deposits graph, it doesn't seem that atypical to post recession behaviors.
There is shit loads of liquidity everywhere (albeit not in small time deposits) as the first graph demonstrates and no where to go. (no velocity).
After everyone of those previous recessions, velocity was achieved as liquidity chased the next ponzi scheme. Such as housing after 9/11.
The problem right now is that there is no new widget to chase (or at least not one that anyone believes in). I mean, we would need I believe somewhere on the magnitude of 700-900 Apple's to replace the "market" that was. Industrial/Manufacturing ages were tangible, things were made, there was demand, investment and return followed.
Then there was the digital age in the 90's, which moved the needle forward with something new to change the world. Investment and return followed.
Then we had the reality bitch punch us in the face and let us know that everything isn't going digital overnight and then 9/11. After this point, velocity and returns were achieved via housing. But this is where elvis left the building. Housing wasn't anything tangible - it was the hijacking of the American Dream by Oligarchs. It wasn't a new age, it wasn't a new widget, it was magic, fantasy and bullshit. Everyone played in the ponzi, everyone. Governments included.
The smartest people from Ivy League colleges cooked the whole mess up and layered the most complex shit ever conceived on top of it. No wonder Mary at the SEC can't figure anything out.
Here we sit today. Tons of money supply and no place to put it, not even a made up fantasy one. Even the solar and green carbon offset party can't get off the ground.
Citizens are catching on to the charade and the fact that they are being used by the Oligarchs for their own power and profits even though there is nothing there but usury rewarding them. This is where the rule of law checked out. As power corrupted everyone to the point that laws are no longer applicable "for the good of the people".
The Oligarchs need more than anything "the new age" to start immediately with the new widget, the new change the world item - but alas, all the friggen smart people went to work for Alchemy camps. So all we get is HFT, low latency co-located super computers talking to each other about the days of old.
Ponzi's work when everyone gets their cut. However, there is no new Ponzi to plug into the matrix this time - and now were all looking around and saying "shit man, wow did we get taken for a ride!".
Those that have left the system and returned to the simple life are ahead of the curve, return to barefeet, the farm and spending time with their families doing tangible and meaningful work. Where trade occurs like thousands of years before us, where goods or something representing goods are exchanged for fair trade, all without hedges, MBS's, CDO's, CDS's, all without squared securitization, all without MERS, title insurance lawyers, accountants and essentially - bullshit.
http://www.theonion.com/articles/recessionplagued-nation-demands-new-bub...
"Perhaps the new bubble could have something to do with watching movies on cell phones," said investment banker Greg Carlisle of the New York firm Carlisle, Shaloe & Graves. "Or, say, medicine, or shipping. Or clouds. The manner of bubble isn't important—just as long as it creates a hugely overvalued market based on nothing more than whimsical fantasy and saddled with the potential for a long-term accrual of debts that will never be paid back, thereby unleashing a ripple effect that will take nearly a decade to correct."
Me thinks we are still in the late innings of stage one.
Oh, no! What would be do without them?
Shall we give it a try?
¡Vamos!
All that is required for evil to succeed is for good men to keep paying their mortgages.
Oh, but then you get labelled as a "dead beat" by others here. It's an act of rebellion, regardless of the "winner" when the smoke clears. Strategic default for those who need the money for food and otherwise caring for their families is a must.
See the mortgage monkeys make a fool of themselves in the comments:
The Clusterfuck Is Complete: Meet Those Most Hurt By The Earls' Squatting: Conejo Capital Partners... And Soon Millions Of Other "Soon To Be Ex" Home-BuyersI don't really care what I'm labelled. If ones brain isn't sufficient to understand that:
who are even expert at collecting debts themselves and dealing with deadbeats ALSO share the same opinion, then they just merely haven't been around here long enough or are intellectually incapable of that type of comprehension.
Not sure how the stats are measured but the could the increase in savings rate be from the defaults pushing the net debt numbers down? Not because people are actually saving more of thier incomes?
The retail outfows from stocks and decrease in bank accounts would support that people are using savings to survive now?
On another note Robo trader has a point, the market may be rigged, but there are still opportunities to cash in. Just be extra alert!
Yep, just like the dot-crap buyers and the home buyers. Alert!
What part of "Get the frak out!" is so hard to understand?
Those pennies sure look great -- 'cept fer that thar steamroller.
Stop orders dude, stocks are liquid, houses are not, that is the difference
Did it occur to you that gold and silver might be in a bubble too?
OT,
Maybe a BIG drop coming in Platinum?..............
http://www.greencarcongress.com/2010/10/chen-20101017.html?utm_source=fe...
That's interesting.
Might turn out to be a BIG spike in tungsten price, tho, what with this new use and all the banksters needing it to counterfeit more gold bars.
(I kid, I kid. I think.)
Or, money is withdrawn from banks prior to being hit with a debt judgment or declaring BK. If it's not in an account they can't take it.
M2 It's like the japanese model of Just In Time Money Counterfeiting.
"We don't counterfeit till you withdraw all your money and quit." -Fed
Pardon my ignorance but I keep reading that M3 is plummeting. How do I reconcile this with an increasing M2?
Lots of money is going straight from savings accounts into safe deposit boxes and gun safes.
I know a former state senator from a poor rural state. One time there was a flood in a small town and he helicoptered in with the governor to inspect the damage. Among the flooded buildings was a small community bank. The interesting thing was how much cash was in the safe deposit boxes. They were literally drying stacks of the stuff off with blow dryers inside the bank. Remarked the bank president to the senator: "We never realized how much money was in this community until people came to salvage their deposit boxes!" Rural folk never trusted banks to begin with. Now everyone else is realizing the hillbillies weren't so dumb afterall.
Gives new meaning to the phrase putting their money in the bank.
Where do you recommend putting money? "Offshore" narrows it down to about 190 countries. I wish ZH would do a whole series about economically safest countries and currencies. It's tough to get good answers in thread comments of other topics.
Actually the yields on time deposits suck. I think most people think it is stupid to lock rates that suck. So better to earn less and then invest in something when the time is right. Like after the next market crash or when interest rates spike.
Actually the yields on time deposits still suck. I think most people think it is stupid to lock rates that suck. So better to earn less and then invest in something when the time is right. Like after the next market crash or when interest rates spike.
New Zealand, Australia, canada spring to mind
Lady, one of the dudes said to avoid Western banks (which I think includes Oz, NZ). Do you know of any safe Asian or South American countries? How easy is it to get a bank account and transfer funds?
Aussie and NZ banks should be good, mineral wealth to China and all that.
But, US citizens are just waking up to the fact that the foreign banks have already been cut off to prevent capital flight. We're trapped like rats!
Remember the IRS vs UBS lawsuit that cracked open Swiss banking? Yep. If the IRS can crack them open, they have them all. The IRS even has a brand new big facility in Costa Rica. What to do?
Talk to a crooked lawyer in Panama, or some such, to set something up legally. Penalties are severe if you don't declare a foreign corporation so beware. But they know -- China Bank, and all you need, in Panama.
Wait. What? So I have no freaking way of moving my money to an Aussie bank? I am going to be forced to go down with the ship? What do you make of this new law and what are you personally doing if you don't mind my asking?
Holy Sh!t! Where the F did my country go?!
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abSen_erXmTk
Oct. 15 (Bloomberg) -- The IRS is intensifying its hunt for secret offshore banking, opening offices in Beijing, Sydney and Panama City after more than 7,500 Americans revealed undeclared accounts in 70 countries on six continents.
That certainly defines my bank relationships: "Small Time Deposits ". Welcome to the disappearing middle class
Everybody I know is pushing away from institutions. Getting out of money markets, banking, government entanglements, and any other system they can. There's not going to be any tax revenues next year. Run on banks?
People are going Galt and saying -- screw 'em all. I JUMP in it.
M2 is dropping. In terms of the price of gold. M2 is only increasing in terms of dollars.
That is indeed the path to hyperinflation. The more the money printed, the smaller the actual money supply in terms of monetary value.
Tyler dont be that stupid.,.
#Small Denomination (under $100,000) time deposits,
hah,, small denomination,,, THERE'S HUGE DIFF between 10.000 anad 100.000$ deposit..
I wonder how many americans have at least couple dozens thou in cash in bank ?
alx
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