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A Deposit In A Bank Is Not A Riskless Form Of Saving

Tyler Durden's picture




 

Submitted by Tim Price of Sovereign Man blog,

Like Lehman Brothers before it, Cyprus may well come to be seen not so much as the cause of further crisis but as yet another symptom of the ‘long emergency’ that continues to suffocate the western economies.

We would describe this emergency as, fundamentally, an inevitable crisis triggered by an unsustainable explosion of credit; western banks and western governments are now like Macbeth’s “…two spent swimmers, that do cling together / And choke their art.”

The prime minister of Luxembourg, Jean-Claude Juncker, has provided two clear insights into this world of deceit:

“We all know what to do, we just don’t know how to get re-elected after we have done it.”

And,

“When it becomes serious, you have to lie.”

This is what we now have by way of government: a self-serving elite who cannot be trusted, operating to a timetable defined by, and limited to, the electoral cycle.

This liberty deficit is possibly more severely damaging than the supposedly intractable fiscal one that lies beneath it. Yet whatever emerges from the disaster, Cyprus has reminded us of a couple of awkward truths:

  1. A deposit in a bank is not a riskless form of saving.

    We may not see eye to eye with the FT’s Martin Wolf on many aspects of modern economics and central banking in particular, but he described banks well last week:

    Banks are not vaults. They are thinly capitalised asset managers that make a promise– to return depositors’ money on demand and at par– that cannot always be kept without the assistance of a solvent state.”

  2. When states become insolvent, the piper must ultimately be paid. Fatal, embarrassing insolvency is not a problem that can be perpetually or painlessly deferred.

Cyprus matters not because of the size of its economy or because it is (for the time being) a member of the euro zone.

It matters because the inept handling of its crisis last week threw one facet of modern banking into sharp relief: if a deposit guarantee is seen to be fraudulent or sufficiently fragile to be easily smashed by politicians, then confidence in banks, and in unbacked paper currency itself, will be vulnerable to an unpredictable run.

CLSA strategist and financial market historian Russell Napier writes as follows:

“The key impact will be long term as the citizens of the Euro, like the citizens of the Soviet Union or the American colonies before them, eventually reject the sacrifice of political rights necessary to support the system.”

“When the history books are written, the Brussels-imposed sequestration in Cyprus will be seen as the tipping point when the citizens of the Euro system realized that the socio-political sacrifice needed to sustain a single currency was just too great.”

Actions have consequences. Cyprus may end up being a storm in a teacup. Like Russell Napier, we fear it may well be the start of something altogether more sinister.

If you have yet to consider the sanctity, stability, ‘store of value-ness’ and true safety of the paper currency you hold within the banking system, now might be a good time to start.

 

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Mon, 03/25/2013 - 15:27 | 3373752 Badabing
Badabing's picture

just buy PMs

 

Physical that is.

Mon, 03/25/2013 - 15:27 | 3373761 redpill
redpill's picture

Are they trying to say that when I take my paycheck from the bank that created it out of thin air to another bank that then disappears it, that I might never see it again?

Mon, 03/25/2013 - 15:31 | 3373771 flacon
flacon's picture

Banks ceased to be banks whey they went all fractional-reserve on us. Now they lend our loans out to others and make the spread of the risky loan they made and give us an "interest rate". Glass-Steigal?

 

A TRUE BANK will give you zero interest rate on your savings because they are full reserve and don't make any loans with your money. 

 

If you wanted to make loans with YOUR money then you would be in the most excellent stock market that only ever goes up except on days it goes down. 

 

 

Mon, 03/25/2013 - 15:35 | 3373777 Pladizow
Pladizow's picture

Starting with a domino 5 millimeters tall and increasing each successive domino by 150%, the 29th domino will be large enough to topple the Empire State Building.

Also, look at the line where you sign your checks. It has the letters MP next to it, which stands for micro print. What you think is a line is actually words saying, something along the lines of you are only signing as an agent acting on behalf of the owner.

 

Who's that owner?


Mon, 03/25/2013 - 15:37 | 3373807 Seasmoke
Seasmoke's picture

i have no idea why 5 millimeters and 150% are used in your example......but only 29 dominos.....WOW

Mon, 03/25/2013 - 15:41 | 3373825 Pladizow
Pladizow's picture

To solve for X, we must know y and z!

Mon, 03/25/2013 - 15:50 | 3373860 The Juggernaut
The Juggernaut's picture

This is all going as planned.

Mon, 03/25/2013 - 15:55 | 3373897 negative rates
negative rates's picture

You can't trust um, you can't love um, that's our gvt today.

Mon, 03/25/2013 - 16:12 | 3373980 new game
new game's picture

i am getting so f'king sick and tired of these acclaimed talking heads tip toeing around the issue.

THE BANKERS AND STATISTS JUST COMITTED FELONEY ROBBERY - THEIVES BY THE COVER OF THE STATE.

is that so hard to say; wouldn't want to offend anyone...

 

 

Mon, 03/25/2013 - 17:44 | 3374293 little buddy bu...
little buddy buys the dips's picture

...and if they are offended, fuck 'em. that's their problem with their own ego.

 

one banker (or politician) swinging from a lamp post is all it will take.

Mon, 03/25/2013 - 15:43 | 3373830 DutchR
DutchR's picture

Have fun,

Domino Chain Reaction

www.youtube.com/watch?v=y97rBdSYbkg

Mon, 03/25/2013 - 15:58 | 3373912 Grimbert
Grimbert's picture

You are sitting in a football stadium, just over half way up the rows of seating, and for reasons only known to a mathematician the stadium is going to be filled with water. An amount of water will be added each minute that is precisely double that added the minute before. A very tiny amount is added in minute number 1, in minute number two a still very tiny amount is added, but it is twice that of the previous minute, and so on for 60 minutes. It will take an hour to fill the stadium. You are sat half way up. What's the latest you can leave it before you absolutely have to run away?

Mon, 03/25/2013 - 16:15 | 3373985 koncaswatch
koncaswatch's picture

...minute 59. depending on how fast you can run, maybe minute 45.

Moral; don't wait to the last minute do what you must do.

Mon, 03/25/2013 - 16:17 | 3373997 new game
new game's picture

probably about minute 12-15 and best be pissing as you float over the top...

double trouble bubble in a way wacky way- hey man far da f out...

Mon, 03/25/2013 - 16:21 | 3374007 Tulpa
Tulpa's picture

Do I have a bathing suit on?

Mon, 03/25/2013 - 16:58 | 3374104 pods
pods's picture

Is this being filled with actual water, or rehypothecated water certificates while the actual water is held at the NY Fed?

pods

Mon, 03/25/2013 - 17:02 | 3374117 akak
akak's picture

It matters not one whit, as long as you are a bank --- in that case, you can remain underwater (with the blessings of a corrupt federal government) for literally years at a time.

Mon, 03/25/2013 - 17:23 | 3374216 negative rates
negative rates's picture

Well in that case, you won't runnin at all.

Mon, 03/25/2013 - 15:49 | 3373862 seek
seek's picture

The microprint on mine says "authorized signature." I suppose that could suggest agency, but the 50 page booklet AKA contract the bank hands you when you get an account spells it out a lot more clearly.

Mon, 03/25/2013 - 16:31 | 3374039 Curious Monk
Curious Monk's picture

While your statement is true, the 29th domino would do more than that - it would knock the moon out of orbit!

To topple the Empire State Building it would only take 13th dominoes... it would take 29 if each successive domino increased in height by only 50%.

 

Mon, 03/25/2013 - 16:54 | 3374093 aerojet
aerojet's picture

Where do you dream up this bullshit?  The micro-printing is a check security feature and it says something totally innocuous like "this should be words you can read."  It's not some kind of admiralty court fringed-US flag nonsense.

Mon, 03/25/2013 - 17:02 | 3374118 pods
pods's picture

Well it says "authorized signature" cause I looked.  

As to the other part, jury is out in my house.  

pods

Mon, 03/25/2013 - 15:33 | 3373782 ghostfaceinvestah
ghostfaceinvestah's picture

Exactly - fractional reserve lending is the issue - lending out money they don't have.

Mon, 03/25/2013 - 15:46 | 3373839 Groundhog Day
Groundhog Day's picture

“When the history books are written, the Brussels-imposed sequestration in Cyprus will be seen as the tipping point when the citizens of the Euro system realized that the socio-political sacrifice needed to sustain a single currency was just too great.”

I highly doubt that this will be taught or written in history books for our children and grand children to see.  Our children and grand children will have their own form of theft they will have to deal with.  This has been going on for thousands of years...it won't be the last

Mon, 03/25/2013 - 16:07 | 3373947 Urban Redneck
Urban Redneck's picture

1) People complain about low interest rates on their bank "savings", which implies they want a return ON their deposit with the bank

2) Avg Household Debt is greater than 0, implying people want to be able to borrow money from a bank

3) Given 1 & 2 the end of fractional reserve banking would need a) a much better sales job b) some Fascist Totalitarian Strongman to impose it against the will of the people or c) massive economic pain and suffering on an unimaginable scale in order to drive people to it out of shear desperation

4) Austrian economics only provides an incomplete solution, except if you are building a system from scratch and you're building it in a vacuum.

 

Just because fractional reserves are a huge part of the problem doesn't not make their inverse the solution.

Tue, 03/26/2013 - 03:37 | 3375817 Scarlett
Scarlett's picture

b) and c) are here already

Mon, 03/25/2013 - 17:47 | 3374307 little buddy bu...
little buddy buys the dips's picture

...and then charging interest. the fuckers.

 

hang 'em high.

Tue, 03/26/2013 - 01:18 | 3375679 Klaus Daimler
Klaus Daimler's picture

Correction: they are lending out money that isn't theirs.  They do, in fact, possess it.  Possession being 9/10 of the law...  You can reach the logical conclusion.

Tue, 03/26/2013 - 01:17 | 3375680 Klaus Daimler
Klaus Daimler's picture

Correction: they are lending out money that isn't theirs.  They do, in fact, possess it.  Possession being 9/10 of the law...  You can reach the logical conclusion.

Mon, 03/25/2013 - 15:38 | 3373809 CheapBastard
CheapBastard's picture

That's why banks pay you such a high interest rate...b/c they are not riskless, right?

 

[sarc]

 

 

Mon, 03/25/2013 - 15:40 | 3373821 redpill
redpill's picture

I posted this earlier today, but it bears repeating only because it's a reminder of how banking should work.  How about a bank with 100% reserves wherein depositors pay a small fee per $1000 to keep their money safe, and the proceeds of the fee go to pay for the overhead of the bank, and any excess goes into a standalone fund for lending. Loans are only given from the standalone fund, recipients must have an account in good standing, and max loan amount is based on account balance, which is held as collatoral. Fees on collatoral portion of account balance are waived, and loan interest rate cannot be lower than the equivalent deposit fee on the collatoral amount. Missed payments are deducted from the collatoral balance. If collatoral is exhausted, the loan is declared in default, the account is closed, remaining balance returned, and the individual may no longer do business with the bank until they repay the loan. If number of depositors falls such that the bank can no longer cover overhead expenses, it is a bank failure and all depositors are returned 100% of their funds. No bailouts, no bullshit insurance schemes, no pretending.

Mon, 03/25/2013 - 15:46 | 3373842 flacon
flacon's picture

EuroPacific Capital and GoldMoney are like that. Other than that I don't know any full reserve banks.....

Mon, 03/25/2013 - 15:52 | 3373850 redpill
redpill's picture

Europac is a broker similar to other brokers, your money is in a holding acct (I know I have an acct with them!).  They are not a bank and can't lend out your money.

 

Perth Mint is 100% reserve on both allocated and unallocated bullion FWIW.

 

 

Mon, 03/25/2013 - 15:52 | 3373880 angel_of_joy
angel_of_joy's picture

Err, not quite...

http://europacbank.com/topics/security-and-regulation/

quote:

"Since Euro Pacific Bank makes no loans and keeps a 100% reserve deposit ratio , depositors can be assured that the risk of default is extremely low"

At least that's what they're saying...

Mon, 03/25/2013 - 15:57 | 3373900 redpill
redpill's picture

 

He said Capital, not Bank, but even so I didn't realize they had a small overshore banking op.  It's Schiff though, so I take his word for the 100% reserves.

"This Website is intended for the use of NON United States or Eastern Caribbean States citizens or residents"

Heh, oh well.

 

Mon, 03/25/2013 - 16:27 | 3374028 angel_of_joy
angel_of_joy's picture

That's actually an advantage when you manage to get rid of the "privilege" of holding one of the most dangerous passports in the world...

Mon, 03/25/2013 - 18:00 | 3374361 PrintemDano
PrintemDano's picture

Is Jon Corzine nearby?

Mon, 03/25/2013 - 16:00 | 3373918 seek
seek's picture

Is Europac open to US citizens? I guessing not. I'd be curious to hear if anyone is using them.

From the link it looks like there might be a work-around in forming a non-US company that banks with them, but I'm not sure. Definitely intrigued.

Mon, 03/25/2013 - 16:03 | 3373934 redpill
redpill's picture

There may be a way, Schiff is clever.  But you'd probably need a pretty hefty stack to make it worthwhile.

Mon, 03/25/2013 - 19:05 | 3374585 DosZap
DosZap's picture

redpill,

But you'd probably need a pretty hefty stack to make it worthwhile.

Bet your ass, call Schiff's company and see what they charge for handling your money..............it's STEEP.

Mon, 03/25/2013 - 17:08 | 3374136 Mike7.62
Mike7.62's picture

EuroPacific Brokerage is open to US citizens, but I don't think that the EuroPacific Bank is. I just closed my EuroPacific Brokerage account, not trusting counterparties and/or clearinghouses.

Mon, 03/25/2013 - 16:10 | 3373968 dick cheneys ghost
dick cheneys ghost's picture

Can one even obtain a license for a 'full reserve bank'?.... I dont know, but i doubt it.........I mean 'the state' (issuing the license) will want you to buy its Debt in exchange for the license and you cant do that unless you are a 'fractional reserve bank'

Mon, 03/25/2013 - 15:54 | 3373891 sansnobel
sansnobel's picture

Yes, but you are taking the Dimon and the Squid's abilty to use LEVERAGE to put MOAR in their pockets and less in yours.  We wouldn't want the Jew Banker and the Greek Banker to have to earn a living now would we?

Mon, 03/25/2013 - 16:02 | 3373929 Groundhog Day
Groundhog Day's picture

It's a nice dream red pill.  It will never happen in the real world

Mon, 03/25/2013 - 18:47 | 3374518 DosZap
DosZap's picture

I posted this earlier today, but it bears repeating only because it's a reminder of how banking should work.  How about a bank with 100% reserves wherein depositors pay a small fee per $1000 to keep their money safe, and the proceeds of the fee go to pay for the overhead of the bank, and any excess goes into a standalone fund for lending. Loans are only given from the standalone fund, recipients must have an account in good standing, and max loan amount is based on account balance, which is held as collatoral. Fees on collatoral portion of account balance are waived, and loan interest rate cannot be lower than the equivalent deposit fee on the collatoral amount. Missed payments are deducted from the collatoral balance. If collatoral is exhausted, the loan is declared in default, the account is closed, remaining balance returned, and the individual may no longer do business with the bank until they repay the loan. If number of depositors falls such that the bank can no longer cover overhead expenses, it is a bank failure and all depositors are returned 100% of their funds. No bailouts, no bullshit insurance schemes, no pretending.

Too logical, and NO lending each and every dollar at a 10-1 ratio,THAT's where the $$$$$$$$ is made.

Mon, 03/25/2013 - 16:24 | 3374017 new game
new game's picture

banks can never be trustable no matter what - theives always go to where the money is...

Mon, 03/25/2013 - 15:44 | 3373837 Pseudo Anonym
Pseudo Anonym's picture

yep, that's what they say.

my paycheck .....then disappears it, that I might never see it again?

because you have constructive knowledge that it was lent out: http://tinyurl.com/cner4my

Proponents of FRB often say that FRB “depositors” “are” aware of what is done with their money since interest is paid on it. In actuality what they are saying is that such customers are “deemed” to have constructive knowledge of the fact that their money is lent out, since they “ought to” know that this is implied by the earning of interest.

 

Mon, 03/25/2013 - 16:14 | 3373984 dick cheneys ghost
dick cheneys ghost's picture

Pseudo Anonym...........You are correct...........keep pounding the point

Mon, 03/25/2013 - 15:28 | 3373765 wee-weed up
wee-weed up's picture

Socialist governments everywhere have always assumed your money belongs to them. You only get to keep the piddling amount they say you can keep.

Mon, 03/25/2013 - 15:37 | 3373804 howenlink
howenlink's picture

Maybe all the world's John Galts could just pool their gold and buy the Island of Cyprus outright.

Mon, 03/25/2013 - 15:55 | 3373893 mick_richfield
mick_richfield's picture

We will take back the whole world, soon.

Mon, 03/25/2013 - 15:38 | 3373810 kliguy38
kliguy38's picture

you need to move a little higher on the food chain than "socialist governments"......try moving up several notches and you will be at the level of the "deciders"

Mon, 03/25/2013 - 15:54 | 3373887 JR
JR's picture

G.M. Coogan wrote in "Money Creators" in 1937:

“If the Government (or dictators of government policies) controls the lending of money, it can determine who may or who may not borrow money and hence can control every single business in the country. Controlling every business means controlling every economic activity; control of every economic activity gives power to control also the cultural and spiritual activities of the citizen… Lenin recommended Government origination and control of the medium for exchange. Unless the power to originate money is restricted to sovereignty and scientifically exercised, and lending is restricted exclusively to private, independent, State-chartered corporations, it is nothing short of childish prattle to talk about preventing the onrush of Socialism, or whatever name one wants to use to designate an anti-Christian State, in which all but the ‘chosen few’ are hopeless slaves.”

Money in the hands of the Supra-National Money Creators has become a weapon that renders nations powerless to protect themselves from the bankers.

Coogan, in her book, says that creation of money -- the issuing of claims to goods and services valid and acceptable to all the citizens of a country -- is by right a prerogative of the authority exercising jurisdiction over the whole country.

But the lending of the lawful money issued by the governmental should not be carried out by the governmental monetary authority, says Coogan, but by privately-owned Corporations erected into a Guild and functioning under a Guild Charter.

Says Miss Coogan: “The most dangerous things that could be done would be to place the merchandising of money in the hands of the National Government.  Such a step would give the internationalists their final weapon to destroy the property and personal rights of loyal citizens…

With regard to the lending of money by privately owned corporations, she says “existing banks should be divided into two separate institutions…   The first…carrying deposits subject to withdrawal would require 100 percent reserve and no interest would be paid but depositors would pay a bookkeeping service fee.

“In addition, there would be loan-banks for lending or investing.  These savings-banks would get the money to lend from their own money (capital), from the money received from customers (savings accounts), from the money repaid on maturing loans…”   The only limitation on banks loans would be, that no money could be lent unless there was money to lend.

Mon, 03/25/2013 - 16:08 | 3373958 Bicycle Repairman
Bicycle Repairman's picture

Exactly.  Even your wages aren't yours, comrade.

You didn't earn that.

Tue, 03/26/2013 - 08:09 | 3376087 madcows
madcows's picture

That's b/c they are God, and your taxes, i mean tithes, are really just giving back to God what is His.

Mon, 03/25/2013 - 15:40 | 3373820 Dr. Richard Head
Dr. Richard Head's picture

I can't afford a prime minister.  A state rep?  Perhaps, but not a PM. 

Mon, 03/25/2013 - 15:46 | 3373843 madcows
madcows's picture

All you gotta do is flash your TaTa's and they'll follow like drunken frat boys.

Mon, 03/25/2013 - 15:50 | 3373861 THE DORK OF CORK
THE DORK OF CORK's picture

A pure fiat currency would destroy all banking "assets" including gold.

Mon, 03/25/2013 - 18:02 | 3374379 laomei
laomei's picture

PMs are good when you want to maintain liquidity.  However property is better, especially when you can snap it up cheap.  Afterall, if you're going physical PM you better have a safe place to keep it... and it looks like banks are not the greatest idea.  As a store of value, property isn't the worst choice in the world, just don't be an idiot about it.

Mon, 03/25/2013 - 18:33 | 3374457 DosZap
DosZap's picture

PMs are good when you want to maintain liquidity.  However property is better, especially when you can snap it up cheap.  Afterall, if you're going physical PM you better have a safe place to keep it... and it looks like banks are not the greatest idea.  As a store of value, property isn't the worst choice in the world, just don't be an idiot about it.

 

Only one problem with your idea, works great in a an honest OLD system.Nationalization, and seizure for no reason(some excuse for Emnent domain) is why not to invest in property, not counting the taxes that WILL be brought to bear on it, and unlike other Hard Assets, you cannot move IT, and therefore it's not yours.Also you can't farm it(they are banning that).

Mon, 03/25/2013 - 18:47 | 3374521 laomei
laomei's picture

As if gold isn't one of the first things to be seized at gunpoint lol.

Mon, 03/25/2013 - 18:57 | 3374558 DosZap
DosZap's picture

As if gold isn't one of the first things to be seized at gunpoint lol.

Gotta prove you have it, and then find it..................it's MOBILE.

Mon, 03/25/2013 - 19:04 | 3374581 laomei
laomei's picture

Simple solution: I shoot your wife in the face and hold a gun to your kid.  Tell me where the gold is.  Not gonna do you or your family much good when you're all dead.

Tue, 03/26/2013 - 10:31 | 3376645 mayhem_korner
mayhem_korner's picture

 

 

-1000

This is Fight Club...not Murder Club. 

Mon, 03/25/2013 - 19:09 | 3374605 akak
akak's picture

 

As if gold isn't one of the first things to be seized at gunpoint lol.

I call bullshit.

Name the time and place where that ever happened on any organized or systematic basis.

Gold has NEVER been confiscated, only illegalized.  There is a BIG difference between the two (except to the sheep who always blindly follow orders).

Mon, 03/25/2013 - 15:26 | 3373756 kaiserhoff
kaiserhoff's picture

Return free risk.

       Jim Grant

Mon, 03/25/2013 - 15:28 | 3373762 DutchR
DutchR's picture

All your .... are belong to us.

Mon, 03/25/2013 - 15:33 | 3373781 U4 eee aaa
U4 eee aaa's picture

Keep your dirty hands off my dots!

Mon, 03/25/2013 - 15:41 | 3373823 U4 eee aaa
U4 eee aaa's picture

If you take my dots then this really is pointless

Mon, 03/25/2013 - 15:28 | 3373766 Kiss My Iceland...
Kiss My Icelandic Ass's picture

I don't know about you, but if I was in Cyprus I'd get out of Dodge PDQ ... how do you say Dodge in Cypriot Greek (or Turkish?)

Mon, 03/25/2013 - 15:32 | 3373779 fonzannoon
fonzannoon's picture

the worst part about Cyprus is that Bernanke was juuuust about to wind down QE. I swear he was. the economic improvement was juuuuuust about at the point where he could have gracefully exited the fed with no reprecussions at all in the bond  market. but now it's only prudent that he keeps QE going for juuuuuuuuuuuust a bit longer to ensure stability in the US markets. Thank god for that man.

Mon, 03/25/2013 - 15:31 | 3373770 U4 eee aaa
U4 eee aaa's picture

With the stroke of a pen they can declare all fiat currency worthless. Government and their fiat money is the problem, not the banks

Mon, 03/25/2013 - 15:31 | 3373776 philosophers bone
philosophers bone's picture

We thought that were clever thinking that risk of owning cash was inflation / hyperinflation.  Boy, were we stupid.  Add confiscation as #1 risk.

Mon, 03/25/2013 - 16:29 | 3374030 onewayticket2
onewayticket2's picture

long safe and shovel manufacturers....

Mon, 03/25/2013 - 15:35 | 3373780 Racer
Racer's picture

Anyone with money in a bank can now have it stolen inside the bank, no guns, no bombs, nothing, but you can't get it back no matter what and you can't even take the criminals to court!

This sort of grand theft is a bank robbers wet dream, now turned into a depositors reality nightmare.

With this sort of risk I want a LOT and I mean a LOT of interest before I might just think about it!

NO Can't, go away

Mon, 03/25/2013 - 15:33 | 3373785 RougeUnderwriter
RougeUnderwriter's picture

Why not take the cash and put it in your own lock box or vault. Same return - no threat of tax

Mon, 03/25/2013 - 19:07 | 3374592 DosZap
DosZap's picture

We get a bank run here, and I guarantee you the dollar wil be revalued overnight.

Mon, 03/25/2013 - 15:34 | 3373786 Intoxicologist
Intoxicologist's picture

Does Simon Black have a new alias? 

Mon, 03/25/2013 - 15:34 | 3373787 Temporalist
Temporalist's picture

Who would have thought (other than ZHers) that "risk on" meant depositing your pay stub?

Every day is a risk on day!  Forward bitchez!

Mon, 03/25/2013 - 15:35 | 3373789 slightlyskeptical
slightlyskeptical's picture

Nick Murray

'Be an owner and not a loaner'

Mon, 03/25/2013 - 15:35 | 3373791 franzpick
franzpick's picture

Next, the "deposit tax" at the bank counter in the Four & A Half Fifths bank:

"Thank you sir. Here's the receipt for your $1000 deposit, less tax and expenses, showing your net deposit of $900."

Mon, 03/25/2013 - 15:58 | 3373908 negative rates
negative rates's picture

And that's before I get my $12, so it's now $888. And you say you need some fuel for that tank, umm.

Mon, 03/25/2013 - 15:38 | 3373799 Temporalist
Temporalist's picture

Stan now more than ever you need to understand the importance of saving money.

And it's gone

http://www.youtube.com/watch?v=4TlPo0yCSa4

Mon, 03/25/2013 - 15:37 | 3373806 max2205
max2205's picture

More like choking their chickens

Mon, 03/25/2013 - 15:39 | 3373811 timbo_em
timbo_em's picture

As of yesterday, all banks in the Eurozone are run by the Eurocrats who work hand in hand with the Banksters. Dijssel-stay-clear-to-cancel-my-next-bloem confirmed that.

To quote Ann Barnhardt: "Get the [beeep] out!"

Mon, 03/25/2013 - 15:40 | 3373815 CheapBastard
CheapBastard's picture

Savings account holders from here on forward cannot say they were not warned.

Mon, 03/25/2013 - 18:28 | 3374439 DosZap
DosZap's picture

We have a lot more problems headed our way and SOON.

She will not answer Congressional direct questioning about WHY?.

This is A new placement

http://www.infowars.com/dhs-to-buy-360000-more-rounds-of-hollow-point-ammunition/

Mon, 03/25/2013 - 15:40 | 3373818 Arbysauce
Arbysauce's picture

Krugman wants to be the one whispering in the King's ear.

Mon, 03/25/2013 - 15:53 | 3373882 Bear
Bear's picture

Good luck PK, he's deaf and can't hear you anyway.

Mon, 03/25/2013 - 15:43 | 3373832 madcows
madcows's picture

<-- What's riskier, a bank account

<-- or a Government held bond?

Mon, 03/25/2013 - 15:51 | 3373875 Bear
Bear's picture

What's more dangerous shooting yourself with a Glock or a Walthers?

Mon, 03/25/2013 - 15:44 | 3373836 hannah
hannah's picture

MF Global already was the template and everyone ignored it......SHEEPLE ignored it....hahaha

Tue, 03/26/2013 - 00:45 | 3373838 Schmuck Raker
Schmuck Raker's picture

Only a deposit in a Chilean bank is a riskless form of saving.

Mon, 03/25/2013 - 15:46 | 3373841 billsykes
billsykes's picture

I just love the narritive being left out of this story.

Why does a country need an old fashioned bank to function and why does the populous need to bail them out? 

What happened to letting shit businesses fail?

 

Mon, 03/25/2013 - 15:48 | 3373853 youngman
youngman's picture

I still do not think we have heard the last from the Russians...they hate thieves...at least other thieves...I bet this will get interesting the next year as people start to "commit" suicide rapidly...

Mon, 03/25/2013 - 15:48 | 3373855 Bear
Bear's picture

Why isn't gold going through the roof ... every EU citizen should be wondering how to get out of currency and into money. Is manipulation so potent that it can strangle all buying. If so, the short positions at the Big Banks must be substantial (TBTU = Too Big to Unwind).

Mon, 03/25/2013 - 16:01 | 3373925 hannah
hannah's picture

what average EU citizen has any free cash...!...LOL. they are 'out of the currency'...it is called being dead broke.

Mon, 03/25/2013 - 16:12 | 3373978 css1971
css1971's picture

Give it a while...

They have to panic first.

Mon, 03/25/2013 - 15:52 | 3373858 Dre4dwolf
Dre4dwolf's picture

A deposit in a bank, is actually a guaranteed form of theft.

If you deposit money, it give the bank more "reserves" to use as collateral for more money printing (loans).

 

Simply putting your money in the bank is asking to have it debased or stolen.

 

These 40% hair-cuts to depositors is simply an accelerated form of whats been going on anyway during normal banking operations!, people are crying because they stole it all at once instead of a little at a time.

 

You cant even hold your "cash" paper in hand, its not even safe there, because in your hand it can be debasaed, the central bank can simply devalue your money hiding under your matress, or simply completely phase out your bills "ooo bills printed before 2013 are to be read at half face value!"

lol

 

Only way you are "safe" is with gold or silver, because atleast it can't vaporize at the stroke of a pen or the press of a key-stroke.

Mon, 03/25/2013 - 16:44 | 3374068 hannah
hannah's picture

gold's value goes up and down just like fiat. if you bought gold yesterday then you would have lost money selling today......

Mon, 03/25/2013 - 18:31 | 3374448 auric1234
auric1234's picture

It's FIAT value which goes up and down. If you sold FIAT yesterday, then you would have lost money buying today.

In the meantime, an ounce is an ounce is ounce.

 

Tue, 03/26/2013 - 01:27 | 3375692 Klaus Daimler
Klaus Daimler's picture

Gold's value goes up and down exactly unlike fiat: over time and in terms of each other, the gold is worth more, and the fiat much, much less (or nothing).

Mon, 03/25/2013 - 15:50 | 3373859 akak
akak's picture

"It's as safe as ..... money not in the bank!"

Mon, 03/25/2013 - 15:50 | 3373865 Bingfa
Bingfa's picture

Apparently some people need a four pound mini-sledge to the head....

The information has been out there forever...Banks are your worst enemies

 

Mon, 03/25/2013 - 15:50 | 3373866 Vegetius
Vegetius's picture

Had a meeting with some Government people today, Problem? what Problem? is the cry from them plus a load of bullshit that would not be out of place in a feedlot. The EU arselickers and hangers-on just don't see the problem because the cheque still rolls in every week for them and That is all they can see. Its depressing meeting these Guys a bit like for a child realising that the puppets have someone's hand up the puppets backside, some of the more interested of the ZH folk have speculated as to who is the hand, me I really think these fuckers are on auto-pilot.

Common sense is not that common

It is dangerous to be right when the Government is wrong

Voltaire

 

Mon, 03/25/2013 - 15:50 | 3373870 Gamma735
Gamma735's picture

Invest in precious metals, Gold, Silver and LEAD!

Mon, 03/25/2013 - 15:52 | 3373878 viedoklis_lv
viedoklis_lv's picture

You may like this track regarding current topic:

http://youtu.be/4TlPo0yCSa4

Mon, 03/25/2013 - 15:54 | 3373888 mayhem_korner
mayhem_korner's picture

 

 

A Deposit in a Bank is...

a) Low hanging fruit for the confiscatory statists

b) Like handing your 14-year old daughter's boyfriend a condom

c) Bloody stupid unless it is simply a means of providing the liquidity needed to keep current bills paid

d) About as satisfying as paying a toll-booth collector

e) A lost opportunity to buy some nice, shiny Maples

f) An admission that you bleat when you sleep

g) Exactly what Timmay is getting $2K/hour telling bank executives to convince you to do

h) Something that used to make you feel good and responsible

i) More shameful than a deposit at a sperm bank

Mon, 03/25/2013 - 15:55 | 3373895 sosoome
sosoome's picture

 

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

A deposit in a bank is not a riskless form of saving.

Mon, 03/25/2013 - 16:04 | 3373927 redpill
redpill's picture

 

 

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

Banks are not vaults.

 

 

 

Mon, 03/25/2013 - 16:27 | 3374029 icanhasbailout
icanhasbailout's picture

 

 

I like bold text

I like bold text

I like bold text

I like bold text

I like bold text

I like bold text

I like bold text

I like bold text

I like bold text





Mon, 03/25/2013 - 16:46 | 3374074 hannah
hannah's picture

 

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

I CAN COUNT TO POTATO

 

Mon, 03/25/2013 - 17:26 | 3374231 JR
JR's picture

It’s our money; and if the banks would just get out of the way, we could handle our money just fine.

The population of the United States understood what a bank was – it was a place where you could expect there would be reasonable protection of your money. Yes, there’s a contract, but it was understood that as a citizen of the US there was reasonable protection. And now it seems it is not there.

If depositors had understood that the banks owned their money once it was deposited, nobody would have deposited anything.

The people in Cyprus thought they had reasonable protection in their banks. They had an elected parliament; and they believed that their government would oversee these reasonable agreements between businesses, such as the banks, and the people. And it was reasonable for them to expect that if they put their money in a Cyprus bank that it would be there when they needed it. Otherwise, they wouldn’t have put it in there.

Unfortunately, the politicians and the bankers did not have that understanding.

You don’t lend money to the bank. You work, and for your labor you can accumulate money and it is yours. The main reason you put it in the bank is for “safe” keeping and for expeditious use.

And the bank usually says, “If you will let me hold that money I will pay you something to hold it.” That sounds good. “Else,” the bank says, “people will can come and steal that money from your mattress. Our vault is where you should entrust your money.”

So what is this clamor that I lend the bank the money?  Or what is this claim that my money is the bank’s money to do with what it wants”?

“A deposit account is a savings account, current account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and represents the amount owed by the bank to the customer (Wikipedia).”

Americans used to have money that could be exchanged for a fixed amount of gold or silver upon demand. And now, they say, “Are you kidding?  It’s not yours and there isn’t any, and if you try to get your money now the bank will collapse. What are you, some kind of terrorist?”

We don’t need these banks. Let them collapse from the weight of their corruption.  What’s essential is the relationship between buyer and seller. But, oh no, these bankers want to be the go between buyer and seller to make money from both and then turn around and tell the politicians what the banks's reps intend to do with their countries.

Because of this crisis we are getting flooded with bank talk, bank propaganda – from their co-conspirators and the media.  Take last night: all I heard was that this "deal" was going to make a good day for investors worldwide; not a comforting word was said about the fate of depositors. You know from where that speel is coming? The bankers!

And what was that about a Sunday night deadline? That was because of the bankers’ worldwide stock markets. They had to have the deal nailed down for the opening of the markets. It had nothing to do with Cyprus or the people. It was a bank deadline!

Mon, 03/25/2013 - 18:55 | 3374551 DosZap
DosZap's picture

JR,

Sorry;

The people in Cyprus thought they had reasonable protection in their banks. They had an elected parliament; and they believed that their government would oversee these reasonable agreements between businesses, such as the banks, and the people. And it was reasonable for them to expect that if they put their money in a Cyprus bank that it would be there when they needed it. Otherwise, they wouldn’t have put it in there.

They did protect the depositirs with 100k Eu,or less(the stated ins amount guaranteed.( IN the end)

So, who is the dumb asses here?.The ones that kept amounts FAR above that level.

Turns out they are the one's getting their just haircuts, they knew the risks.

Same in the US, 250k per Depositor(still at that level),matters little that the fiat is worthless.IF you have as an indivdual OVER that amount, you for sure will not get reimbursed.

Now ask me if I would keep that 100k in their after the smoke clears, HELL NO.

Mon, 03/25/2013 - 19:28 | 3374662 JR
JR's picture

Obviously, Dos, money in the bank over the guarantee is at risk. But if the only reliable expectation is that all money over the guarantee will be lost, then an elected parliament is not necessary, only contracts between individuals and their banks are necessary.

IOW, there’s no such thing as reasonable justice; there is only legal black and white. In this case, the uninsured depositors were not the criminals who took the money or the big risks but were zeroed in on as the most defenseless. When the banks were closed, and nothing could be done,Troika went in and picked the fruit, after Parliament originally had  rejected a proposed levy on all deposits . And then closed the banks!

You don’t normally expect when your country is in trouble it will take your bank account. The shock of it has been felt around the world.

I don’t know about Cyprus, but in the United States we expected better of the Congress and representative government. If it finally comes down to mere legal juggling then certainly the Congress is no longer necessary in that it offers no reasonable protection.

Cyprus' Parliament had no say; it was just a mugger. It shut the door, held the man’s arms back while the other beat him up.

Technically, you’re right, Dos. But is it justice?  And I appreciate your closing salvo. :-)

Mon, 03/25/2013 - 15:55 | 3373898 ziggy59
ziggy59's picture

Can someone please translate this? Fed's Bernanke says obviously some areas where Europe is an optimal currency area but at the same time there are areas where there are differences
http://ransquawk.com/headlines/fed-s-bernanke-says-obviously-some-areas-...

Mon, 03/25/2013 - 16:04 | 3373942 howenlink
howenlink's picture

To illustrate, in the "area where there are differences" the ATM's are marked with big red X's made out of duct tape.

Mon, 03/25/2013 - 15:57 | 3373905 q99x2
q99x2's picture

Good way of looking at politicians. Mayswell unelect them at the first opportunity in everycase. That way they will have the same chance of being re-elected and can do what they know needs to be done. Now wait a minute that won't work either.They'll just double on the bribe money. Just replace the bastards with open source software and be done with them.

Mon, 03/25/2013 - 16:06 | 3373948 IridiumRebel
IridiumRebel's picture

In wish you all a long, slow bank run....keep withdrawing my friends!

Mon, 03/25/2013 - 16:06 | 3373953 smacker
smacker's picture

 

How long before customers demand a proper interest rate + a risk premium from banks?

Right now I'd say that was about 6% + 3%.

Mon, 03/25/2013 - 16:09 | 3373962 zipit
zipit's picture

Cyprus seems more like Bear than Lehman to me (right now, at least).

Mon, 03/25/2013 - 16:21 | 3374011 Downtoolong
Downtoolong's picture

I think you could say very similar things about investment risk resulting from the coordinated borrowing, over spending, and money printing policies of top tier countries. One of the most unsung and perhaps unintended consequences of the Fed’s ZIRP policies and practices is that the 30-year Treasury Bond has become a relatively high risk asset. 

Mon, 03/25/2013 - 16:24 | 3374019 JR
JR's picture

 Writers point out that four of the five extrinsic titles, namely, lucrum cessans (gain given up), damnum emergens (resulting loss), periculum sortis (risk) and poena conventionalis (liability to a forfeit), “properly apply only where the lender of money gives up already existing money created independently of him, which by his industry he has succeeded in acquiring.”

This is the giving up of real wealth. Professor Frederick Soddy, Nobel prize-winning chemist and author of the 1925 book Wealth, Virtual Wealth, and Debt, argues that this “real” wealth “is derived from the use of energy to transform materials into physical goods and services,” and states:

“The evils of genuine usury in the Middle Ages through the shortage of the precious metals and the insufficiency of the medium of exchange, cried aloud to heaven for redress. But the genuine usurer did at least give up what he lent and that for which he received interest, whereas the bankers does not… It is bad enough to be in the grip of the money–lender who does not lend his money, but it is a millions times worse to be in the grip of the pretended money-lender who does not lend his own money but creates it to lend and destroys the means of repayment just as fast as the debtors succeed in repaying it.”

Such an exchange-medium, says Sir Reginald Rowe, “is created and cancelled in the manner best calculated to make profits for the creators.”

Mon, 03/25/2013 - 16:33 | 3374044 Tulpa
Tulpa's picture

Prescient E-Trade commercial:  http://www.youtube.com/watch?v=9tE6iZ61r5c

Mon, 03/25/2013 - 16:56 | 3374103 Urban Redneck
Urban Redneck's picture

Yes, come bank with us, get higher interest rates (before we go belly up and need a bailout)

They're very pitch is reflective of underlying problem of people (bank customers) not understanding the first thing about banking...

Mon, 03/25/2013 - 16:47 | 3374052 Contra_Man
Contra_Man's picture

 

Go Long Safes...

& Go Long Vaults

>>a new asset class.

Mon, 03/25/2013 - 16:38 | 3374056 WTF_247
WTF_247's picture

Think about this:

Bank of America has over $800bil in deposits.  If you created a 100% reserve bank that did nothing but "hold" peoples money and had that amount of deposits you could make a boatload.  

If you could assure people their money is 100% safe (other than total US govt collapse) I would think it would be easy to pull off big deposits.

Of course you would need normalization to somewhat regular rates to pull it off.  Even at 1% per year blended that is like $8bil in revenue.  Since you are not making loans or doing anything really the overhead would be low - you do not need 50k employees to pull it off.  You would need perhaps 1000 branches setup + employees to staff them.

1000 branches x 10 employees x 100k each (lets pay tellers a lot) = $1bil

Lets add in $1mil per branch per year for other overhead/rent/regulatory costs = $1bil

Even with that setup we are at 2bil in costs, leaving us with a nice profit of $6 billion without making any loans at all.   You would only start to lose money if the earnings dropped below 0.2% per year and you could not cover costs.  Longer term that is a very low hurdle rate - right now it would not make sense to setup something like that.

 

Mon, 03/25/2013 - 16:49 | 3374083 BullyBearish
BullyBearish's picture

Larry Fink, "... it’s not a really major economic issue."

 

Either Larry is stupid or a liar (and thinks YOU are stupid)...oh wait a minute

Mon, 03/25/2013 - 17:29 | 3374238 f16hoser
f16hoser's picture


A Deposit In A Bank Is Not A Riskless Form Of Saving / Holding Gold & Silver is though. wink/wink

Mon, 03/25/2013 - 18:18 | 3374408 Dry end of the ...
Dry end of the Titanic's picture

"A deposit in a bank is not a riskless form of saving". Let every saver throughout the world take this fact on board. Your deposit is a LOAN to the bank. If the bank goes insolvent, you are, theoretically, first in line for any remaining assets, but in extremis, you will lose anything that is uninsured, and if the soverign cannot back up it's insurance policy, you will lose some or all of the insured amount aswell. This is the new normal.

Let this reafirmation of fact guide your future investment decisions.

Mon, 03/25/2013 - 19:00 | 3374570 tony bonn
tony bonn's picture

the cyprus genie cannot under any circumstance be put back in the bottle.....there are a few who will take the lessons learned from the euronazi rule of europe and the nazi rule in the usa and do the right thing for their survivals - namely withdraw cash from banks.....but most people will yawn saying, "well it didn't happen to me so i guess it's not a problem yuk yuk yuk..."

the next bank blow up will be bigger and badder with much hurt to go around....for such people i have limited sympathies....i know people who don't even know what happened in cyprus - not a fucking clue and those who do have a clue say it can't happen here.....it will happen here and we are only months away from such an event....

the cyprus waves will propagate for months if not years....do not be fooled....this episode was only a warm up....

 

Mon, 03/25/2013 - 19:19 | 3374631 Umh
Umh's picture

I like the banks are not vaults theme, but I don't think I want a vault in my home. I do not live with extended family and believe suspicion would be raised when a vault of any size is delivered. What's a guy to do?

Tue, 03/26/2013 - 02:04 | 3375738 serema
serema's picture

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