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Russell Napier Declares November 16, 2014 The Day Money Dies
From Russell Napier of ERIC
It is with regret and sadness we announce the death of money on November 16th 2014 in Brisbane, Australia
‘A mark, a yen, a buck, or a pound
A buck or a pound
A buck or a pound
Is all that makes the world go 'round;
That clinking, clanking sound
Can make the world go 'round.’
“Money” from Cabaret by Kander & Ebb
In the musical Cabaret, Sally Bowles and the Emcee sing about money from the perspective of those witnessing its collapse in value in real terms in the great German hyperinflation of 1923.
Less than a decade later, and a continent away, a young lawyer from Youngstown, Ohio noted on July 25th 1932 how money’s value could also fall in nominal terms:
"A considerable traffic has grown up in Youngstown in purchase and sale at a discount of Pass-Books on the Dollar Bank, City Trust and Home Savings Banks. Prices vary from 60% to 70% cash. All of these banks are now open but are not paying out funds."
The Great Depression - A Diary: Benjamin Roth (first published 2009)
In Youngstown the bank deposit, an asset previously referred to as "money", had fallen by up to 40% relative to the value of cash. The G20 announcement in Brisbane on November 16th will formalize a "bail in" for large-scale depositors raising the spectre that their deposits are, as many were in 1932, worth less than banknotes. It will be very clear that the value of bank deposits can fall in nominal terms.
On Sunday in Brisbane the G20 will announce that bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure. With deposits then subjected to a decline in nominal value following a bank failure, it is self-evident that a bank deposit is no longer money in the way a banknote is. If a banknote cannot be subjected to a decline in nominal value, we need to ask whether banknotes can act as a superior store of value than bank deposits? If that is the case, will some investors prefer banknotes to bank deposits as a form of savings? Such a change in preference is known as a "bank run."
Each country will introduce its own legislation to effect the ‘ bail-in’ agreed by the G20 this coming weekend. The consultation document from the UK’s Treasury lists the following bank creditors who will rank ABOVE depositors in a ‘failing’ financial institution:
- Liabilities representing protected deposits (in the UK the government guarantee protects 100% of deposits up to the value of GBP85,000)
- any liability, so far as it is secured
- Liabilities that the bank has by virtue of holding client assets
- Liabilities arising with an original maturity of less than 7 days owed by the banks to a credit institution or investment firm
- Liabilities arising from participation in designated settlement systems
- Liabilities owed to central counterparties recognized by the European Securities and Markets Authorities… on OTC derivatives, central counterparties and trade depositaries
- Liabilities owed to an employee or former employee in relation to salary or other remuneration, except variable remuneration
- Liabilities owed to an employee or former employee in relation to rights under a pension scheme, except rights to discretionary benefits
- Liabilities owed to creditors arising from the provision to the bank of goods or service (other than financial services) that are critical to the daily functioning of its operations
The above list makes it clear that deposits larger than GBP85,000 will rank ahead of the bond holders of banks, but they will rank above little else. Importantly, both borrowings of the banks of less than 7 days maturity from other financial institutions and sums owed by banks in their role as counterparties to OTC derivatives will rank above large deposits.
Large deposits at banks are no longer money, as this legislation will formally push them down through the capital structure to a position of material capital risk in any "failing" institution. In our last financial crisis, deposits were de facto guaranteed by the state, but from November 16th holders of large-scale deposits will be, both de facto and de jure, just another creditor squabbling over their share of the assets of a failed bank.
Interestingly, HM Treasury uses the word ‘failing’ rather than "failed" in its consultation document and investors could find their large deposits frozen for a prolonged period in any "failing" institution while the courts unpick the capital structure and decide exactly where any losses should fall.
If we have another Lehman Brothers collapse, large-scale depositors could find themselves in the courts for years before final adjudication on the scale of their losses could be established. During this period would this illiquid asset, formerly called a deposit and now subject to an unknown capital loss, be considered money? Clearly it would not, as its illiquidity and likely decline in nominal value would make it unacceptable as a medium of exchange.
From November 16th 2014 the large-scale deposit at a commercial bank is, at best, a lesser form of money, and to many it will cease to be money at all as its nominal value can fall and it could cease to be accepted as a medium of exchange.
Fortunately, the developed world’s commercial banks are flush with central bank reserves and these are instantly convertible into the banknotes which they may need to meet demand from depositors. While the huge level of reserves on the balance sheet is a buffer, the funding of fractional reserve banks is still very negatively impacted by a shift from deposits to bank notes. With deflationary forces gathering momentum, this further impediment to the extension of commercial bank credit would be another factor preventing central bank monetary largesse translating into growth and inflation.
As the world’s smartest lawyer Charlie Munger is fond of saying, "Show me the incentive and I will show you the outcome." Some simple mathematics reveals that the November 16th announcement will create a very major incentive for investors to change deposits into banknotes.
Consider that the standard pallet measures 1 metre by 1.2 metres and will take 84 piles of Euro 500 banknotes. The UK’s Health and Safety Executive recommends that the height of a pallet should not exceed the widest side of its base. A 1.2 metre high pile of banknotes contains 11,000 notes and thus each pallet can safely hold 84 piles of 11,000 banknotes. A pallet of safely stacked 924,000 Euro 500 banknotes is therefore worth Euro462m.
There is a small warehouse for rent near Newry, at the foot of the Mourne Mountains in Northern Ireland. Given its dimensions (16.5m x 9.0m x 5.6m) one could stack 468 pallets of 500 Euro notes representing Euro 216bn. At the current bank deposit rate of minus 50bp per annum, the cost of carry to have Euro 216bn on deposit with a commercial bank would be Euro 1,081m. The annual cost of the warehousing space is around Euro 7,000!
Now clearly this warehouse will need significant private security, but in Northern Ireland there is an over supply of such security due to a structural change in market conditions, and prices are reasonable. Anyway, just how much security could you afford if you charged clients 20bp to hold their Euro 216bn, and generated an annual fee of Euro432 million, with an annual saving to your clients of about Euro 648 million?
This represents both a yield improvement and a significant improvement in capital risk compared to bank deposits, as bank notes cannot be "bailed in." There is therefore an annual profit of around Euro432 million for the manager with a warehouse and friends in low places. Anyone for the "Mourne Or Newry Enhanced Yield Banknote Actively Guarded Security", or MONEY BAGS for short?
As ever, there is a first-mover advantage. There are only about 600 million 500 Euro notes available, though sizeable arbitrage profits still exist on warehouses full of 200 Euro notes. As the function of such warehouses is focused on the role of money as a store of value, a role no longer fulfilled by the large-scale deposit, one should expect a premium to develop, and potentially a secondary market in note-filled, well-protected warehouses. For warehouses full of German Euro notes --- those are the ones with a serial number beginning in X --- a particularly high premium may arise due to risks of a future Euro break-up.
Irish legend tells of an X at the end of the rainbow marking the position of a pot of gold. In our post- Brisbane world, investors may be content to find just a bundle of paper marked with an X.
Oh, Mary, this London's a wonderful sight
With people here working by day and by night.
They don't sow potatoes nor barley nor wheat,
But there's gangs of them diggin' for gold in the street
At least when I asked them, that's what I was told,
So I just took a hand at this diggin' for gold,
But for all that I've found there, I might as well be
In the place where the dark Mourne sweeps down to
the sea.’
Percy French 1854-1920
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The use of bail ins is a joke. It assumes there are deposits that can be used for the bail in. There are no deposits to save anything. What they are really saying is your "money is gone, and so is your old bank, but now it is legal. There will be no prosecutions".
"and it's gone"
https://www.youtube.com/watch?v=-DT7bX-B1Mg
No prosecutions but many hangings...
It's about time that someone gave me the exact date and time. Six years waiting...
</s>
My money - digital figures on a laptop screen - feels less and less like 'mine' all the time.
I think the Gubmint increasingly sees my 'money' as a resource belonging to it. Because, 'I didn't build that'.
You didn't print that!
You should try Germany some time. They routinely dip into your bank accounts just in case you didn't fill out the correct form with the correct details to tell them how much tax you should be paying.
It becomes quite clear that all money is their money and you have to ask them nicely for it.
Is your face on it? Your name and address?
my bank deposits have gone down by about 75% with enough to pay bills left. Everything else is.....well, let's just say it was a bad day at sea.
You'll find 100% of satanist scum globalists marked with an X
Remember X marks the spot
Sign next to the X
Place your mark (X) here
There is a reason, after all, that the highest circulating nomination of the global currency is $100.
So long as it stays there won't be hyperinflation.
We are just one major military defeat away to change that.
And that is why it takes a whole fleet of c130's packed with 100 dollar bills landing in Syria every six months to keep ISIS funded.
I hear they'll accept gold and silver too.
It's worse than that Dianabol-dude... We are just (1) major foreign policy fuck-up against China, Russia (or both), away from a $dollar crisis. Meanwhile, they simply bide their time. The 'window of opportunity' is open - for probably the next few months while the current resident of the Out House is still 'viable' and McCain's army has yet to be 'fully optimized'...
They've ALL been military defeats since 1947. Depends on what you call "major".
depends on what the actual goal was
But that's what wheelbarrows were for in the Weimar hyperinflation. So buy your wheelbarrow now, before you have to drag your cash across the ground to the store on a bed sheet.
it's an Oscar Pistorius bank run
You mean electronic or murderous...?
everything's disabled
and the bad guys are beating the murder rap
+++
Allright, I gotta ask the dumbass question here.
What exactly is a banknote for purposes of this conversation?
Paper money in hand as opposed to money on deposit at a bank.
Physical paper money, the kind you would put in a stripper's thong. The reason this is conceivable with Euros and not USD is, as Steroid pointed out, 100 is the maximum denomination of USD making it much less economical to store in large quantities.
Actually, USDs are available in denominations of up to $100,000.
See http://www.marshu.com/articles/presidents-on-us-united-states-paper-bill...
True, never officially withdrawn but effective supply 0
http://poorrichardsnews.com/post/102336560238/obamas-ag-nominee-has-seiz...
Graft is becoming outright theft. I suggest a pre-emptive bank run before the crowd gets going. I have been doing this since the Cyprus incident.
I have been waiting to let deflation do it's work before buying lot's more precious.
I am thinking it may be time to get moving.
there is no magic time
when everything is black magic
we've never been down a rabbit hole so large
and no one knows when it blows
not even the ones who are smoking
get gold when you can
and forget their stupid games
and stack that phyzz silver too. This GSR at right now 74:1 puts silver at a screaming discount compared to gold. Many of the "big-timers" say 75:1 and up is when they would stack piles of silver. Well right now is close enough for us "small-timers" to back up the truck for the phyzz silver.
The premiums are going up and supply is dwindling as the paper prices continue to give us the sale of the century, so take advantage of it while you can still get it this cheap.
There's plenty of time for gold (in my opinion) to play the GSR swap game at some point in the next few years when this GSR reverses and starts to drop below 30:1 and towards 15:1.
That's when you swap your cheap silver for gold and pile it up. Gold might be hard to come by then and premiums might be huge, so if GSR hits 20:1 it might actually "cost" you 30:1 on a swap if you find someone who wants to part with some gold. Maybe we won't, who knows?
But if the ratio is so close to 15:1 or lower at some point then swapping for gold might not even matter...price parity will finally be where it should be, because frankly, silver is more rare and is used and destroyed industrially where gold is not. So fundamentally in a better world silver should be more valuable than gold.
That also might be when you trade some silver for something else like full payment on some nice land with a house, etc.
Just keep stackin' phyzz and put it away (protected by Smith & Wesson or your defender of choice), and wait for those days to come. Because they will come...just a matter of time. And we're closer to those days now than ever before...tick tock, bitchez. ;-)
Never have sold any phyzz except to exchange for gold on the day silver hit $50.
It was my birthday!
Anyhow, I think I will go ahead and sell/exchange that same gold for silver now.
50-60% improvement in cost basis.
NICE!
Also, as you say, time to add more to the stack.
So ~ your LCS is open on Sundays?
You're nuts.
May never get better.
With that attitude.
No problem.
Just buy super duper safe U.S. Treasuries.
otherwise known as SuperGlue
I kept hearing it was going to be November, 2010. :-(
Timing this thing's a bitch, and the meatsuited demons have kept this farce going a lot longer than I could have ever imagined possible. Oh well, gold, silver, and lead; what more needs be said?
2008 showed the banks in tax havens are very safe.
Oh you mean like Cyprus..? Thanks for the tip Batman ... or should I call you the Joker ?
This whole article screams....GOLD to me
Just to state the obvious, only a total f'n moron would give a bank an unsecured and uninsured loan (uninsured bank deposit) ... especially when they do not pay a rate if interest that is commensurate with the risk.
After 2008, I don't understand why anyone in their right mind would hold more than FDIC limit in any single depository institution.
Fucking retards deserve to have their money confiscated for trusting a system that is designed to fuck them.
Have you checked what the FDIC holds in relation to INSURED deposits? Shit son, 100/1, of course they can print it, thats what you meant right you want those fresh just printed bills..
Misfire.
But aren't the Australians just as dumb as Americans are when it comes to actually noticing a change in bank regulations? I'm guessing that the average Joe Aussie will continue going about his daily routine, with drool running down the side of his mouth, completely oblivious that he just handed over whatever is left of his money to the Banksters.
By driving people away from the traditionally safe places to keep money, TPTB will drive them to other places. How will they keep skimming if people aren't putting their money into the banks?
And with fewer people putting their money into big banks, their 'wealth' will be increasingly out of reach. I think of Indian housewives living in their little villages, no bank accounts, but thousands and thousands of dollars of yellow metal hanging off their necks, their arms, their ears...they have the right idea. With no bank accounts to tap, the only way to part these folks from their wealth would be to physically go and TAKE it off women's bodies...which no government in modern times has done successfully. And which would be fun to watch. Soldiers entering rural villages, laying their hands on Muslim and Hindu women in front of their angry men...I'll bet more than half would refuse right off the bat in religious outrage.
We may poke fun at these folks for their backwardness, but in many ways they are better equipped than we to make it through hard times.
"We may poke fun at these folks for their backwardness, but in many ways they are better equipped than we to make it through hard times."
Very astute observation, not to mention those people are often in close knit communities in the rural villages, and look out for each other. Who will look out for you when the SHTF and you're looking for water and food in the middle of NY? No one cares about you right now, what about then? Faaaahrget about it!
Damn straight SeattleBruce! I don't envy us our technological advancement...I miss the 'looking our for each other' thing. I'd gladly hand over my cell phone in exchange for someone to REALLY talk to!
We have the illusion of being so modern, yet don't ever consider how vulnerable we are. Our 'modernity' depends on the vagueries of such things as indoor plumbing...when they fail, what then?
The Golden Rule 2.0: "If you don't got it, you don't have it."
An American, not US subject.
"An ounce in hand is worth 5,000 in the fiat bush."
Indeed! And don't forget Kirk's admonition on Ownership:
1. When the Rule of Law applies, Possession is 90% of the Law.
2. When the Law of Rule applies, possession is 100% of the Law.
Hedge and plan accordingly. Kirk out.
Watch as when a bank is imploding, they will take out a derivative position that drains the remaining capital to someone just as you think you're safe.
Corzine was just ahead of his time.
Inflammatory article.. what of FDIC deposits in US banks? Insurance up to 200k I believe. Maybe that gets a hair cut as well ?
How much money, i.e. cash, is it that you believe the FDIC has?
Seriously.
what of FDIC deposits in US banks?
If it's no longer considered cash it's not insured
According to Ann Barnhardt's video, about 90 billion dollars to cover over 7 trillion in deposits.
You do realize that the FDIC has about 2% of the necessary reserves to backup all of the deposits. $56 million. Bank of America alone would wipe the fund out if it went belly up. Its is a charade to think that moeny is backed up without the FED printing presses having to be ramped up just like in 1990 with the S&L crisis.
$56 billion not million
A tear in a hurricane is what that is...
<---Gold, silver, steel & lead
<---Electrons, paper notes
Those who do not learn from the Cyprus confiscation and the Weimar hyperinflation will be doomed to repeat them.
Please clarify:
Gold, silver, steel & lead are MADE from Electrons (so is paper but that is irrelevent)
protons neutrons ++++++ ect. empty space
Store large quantities of cash in a warehouse in Northern Ireland?
Congratulations, you've just fully funded the IRA's pension fund!
Villa's in Spain all round!
http://en.wikipedia.org/wiki/Northern_Bank_robbery
Genuinely funny Russell.
Don't turn your bank deposits into a pile of matress stuffing fiat - the better choice is to switch to something that 'pays interest' - at least to the point where it increases in value -- something like toilet paper! Buy now, stash it safe and dry, and watch the price rise 10%. It's like getting 10% on your 'savings'.
But only buy things you know you will use (need) in the future, and that have long enough expiration dates (or no expiration dates).
Marlboros and Johnny Walker will probably perform better than banknotes.
TideTM Laundry Detergent is currently a Black Market currency.
This is already built in to Dodd-Frank, i.e. they passed this into law years ago.
Get your money out of these fucking major banks! You know who they are, the major money center, too big to fail, banks! Pull every penny, everyone should leave them devoid of capital from deposits. There should still be some smaller credit unions and local banks. In my small town we have Wells Fargo and just across the street a locally owned and managed bank since 1886. Half the town banks with Wells, and my half banks at the locally owned, and managed bank. Perhaps I am on my ass, but I don't see why anyone should bank with Wells Fargo, famous for their housing bubble fraud. Up the street is the local Coop Credit Union, founded in the 1950's as part of a former Cooperative grocery store. Now a free standing Credit Union for locals.
All I am saying is we should fuck big banks up the ass. There must be some alternative for people other than the Big Banks. Yet in the nearest regional city of 100K, I see all the major banks with branches all over town, and downtown, each major bank has a regional headquarters, a downstairs lobby bank, and then 15-20 story offices that manage the regional banks. Years ago when I did a lot of international trade, purchases and sales, I needed these big pricks, as only they could do international deals. But the fees! Fucking fees were insane. I guess if you work internationally you may still need these fuckers, and their connections to SWIFT. From my local bank and CU, I can't do any deals in Europe. People from Europe can't pay me through SWIFT, and I can't pay for anything through SWIFT, WHich sucks. I see that Bitcoin could replace all of SWIFT and all it's fucking rip off fees!
Right on, Jack Burton.
The banks are not a safe place to put your money. Now they are writing it down. What more evidence does anyone need. Deposit at your own risk!
I don't see the point. So long as the bank has equity, it can borrow the deposits it needs from other institutions.
I suspect Napier is a scottish rite mason and he has somehow been instructed to give out a bank run meme.
However given his pedigree he must be taken seriously.
The guys and girls of the Irish CB want us only to deal with electronic money so I guess "de paper" is only for the elite.
Judging from a economic rather then the criminal perspective of today all of the cash on deposit in ireland could not get within a asses roar of the current price of land and property.
How will existing cash be able to buy the stuff ?
I have listened to napier on occasion.
I remember him speaking quite fondly of the fireplace and window tax.
Guys like Napier have been a pox on these islands since Tudor times.
Many people have his mark.
They will go to any lengths to maintain the concentration of money and political power.
Including causing the total collapse of the society they feed upon.
Relative wealth disparity means much more to them then wealth (wellbeing)
With something like 40% of births in Ireland now being to non-Irish women - Ireland has bigger problems even than the banks and the RE bubble.
You're being wiped off the map, and too scared to complain about it lest someone call you 'racist.'
Alan Shatter, of course, yearns for a 'transnational Ireland' - one which his friends and family can more readily subjugate and bring into the NWO fold.
The Misplaced Minister: Ireland and Israel's Alan ShatterWould that be those "black irish" of long past yore?
The island before the eruption.
www.youtube.com/watch?v=0QHYFXDGf4Y
@John boy
I know I know.
Its the second Munster & Ulster plantation.
But do you suggest I start killing some newly destitute citizen of the banks blown in from Syria or wherever ?
The Irish were the first Syrians if you will.
Its hard to tell people here that these people are our enemy chiefly because they are not.
Many people still feel some sympathy rather then hate for the Ulster Banking roboton.
We regard them as lost souls of the Calvinist money power movement.
Anyhow Ireland was never a nation in the French or English meaning of the word.
Until major migration flows bagan to happen in the mid 1990s most people had more connection to their local area rather then their country which was always seen as a extraction operation run out the Pale.
Please start by reading some decent irish books about the liberal culture wars of the 70s and 80s
http://www.amazon.com/Nice-People-Rednecks-Ireland-Eighties/dp/0717114511
"Alan, me lad. Would you care for some rum or polonium in your Irish Breakfast Tea?"
Thats a fantastic point "Dork of Cork"! The paper value of these things is not backed up by real wealth. In other words, the paper values exist where there isn't the money to pay everyone what their properties are claimed to be worth. A problem should enough people seek to cash out and realize their property gains. So sure, you are right on the money, that property is NOT worth the paper vaules, because the money does not exist in the banks to buy the properties.
England, and that fucking mad house in London! It's a fucking mad house! Anything that can claim a square couple feet of London RE land is priced as insane as possible. A sort of 80's like Japanese RE Bubble. People in England are going so massively into debt to buy over priced RE, a simple little flat or worse still, a tiny row house, are priced to the fucking moon. I watched the Ireland property bubble from over here in USA, I folloed it from 2000 - to the crash. It was out of control insane. Now London is worse in 2014. But it will fucking crash, everyone's fucking London flat can not command 600,000 pounds and up. There is not that kind of money out there. IT'S ALL ON PAPER.
But the plan is to create more deposits /loans outside Ireland and buy /steal the land off us in exchange for scarce money in Ireland.
Its working.
These guys know only how to concentrate wealth and not create it.
"The G20 announcement in Brisbane on November 16th will formalize a "bail in" for large-scale depositors raising the spectre that their deposits are, as many were in 1932, worth less than banknotes. It will be very clear that the value of bank deposits can fall in nominal terms."
In 2008 the Bankers Business Model Failed in spectacular fashion! The Governments of the world quickly stepped in to short circuit market forces, and to prop up the failed Banks. All a familiar story now, but at the time, this was big news. Failure would now be rewarded, and has! From that victory, Bankers have gone on to carry ut a comlpete coup d'etat and take over these same governments. Using bought and paid for politicians, the Bankers now write the regulations in their interests, and control any reformers by putting them out of office via campaign contributions to pro banker candidates. Thus their coup is complete. What we see above is one of the final acts of this coup. They are claiming powers and rights that are beyond all legal basis that bankers traditionally operated under.
Bankers are now part of the Neoliberal elites who run government, along with their imperial counterparts the Neoconservatives. Banks have too much power and we should all take our money out of these fuckers hands.
"Banks have too much power and we should all take our money out of these fuckers hands."
and do what with the money?
Do what they do with the money. Lend it out via secured loans, and make the profits they make. After all, it's your money.
Excellent point! Does he assume only Banks can decide what OUR money should be used for!
They should take the dead presidents off the bank notes. Put the pictures of prominent banksters, past and present there instead. Baron Rothschild on the $1, old JP Morgan on the $5, Lloyd on the $10 and Jamie on the $20. The $50, the Bernank, and the hundred would have Bozo the Clown or Mr Yellen, I can't decide.
Maybe then the sheep would get it.
I'm thinking that Mr. Yellen would make a fine Bozo...
So you're saying we should just have William Banzai design the currency?
I can get behind this.
I'm trying to picture that in a real world scenerio...such as a friendly little poker game:
"I'll call your 2 Jamies and raise you a Bozo".
Naw, never gonna work.
Andrew Jackson on the 20.
If that isn't the biggest FUCK YOU, I have ever seen I don't know what is.
Banks had decades of benefit of interest on money they created out of thin air.
Let them eat losses, and if you were dumb enough to let them have a lot of your wealth in cash form... well, consider blaming the right people when you grab your pitchfork and torch.
Bail-ins should be cause for revolt.
The issuing power should be taken from the banks and restored to The People, to whom it properly belongs.
I feel for the bank tellers who will be at the receiving end of irate customer vitriol when ATMs limit their withdrawls.
Most people with even a passing understanding of banking understand that when you make a deposit you are lending money to the bank to use as they wish. People just don't think about it,. Of course a loan is part of a company's capital structure. They are also very safe, because banks are regulated and pay into deposit insurance. As for banknotes being superior to bank deposits in terms of security, that's obviously the case ( ignoring theft, loss etc). On the other hand notes don't pay interest wheras loans do. What is the point of this article again?
What is the point of this article again?
That your 401k is no longer consitered money and is no longer covered by FDIC
I don't see the connection between a bank deposit and a 401k. I don't think 401k are even allowed to invest in banks. The money market funds available through a 401k are totally different, no?
Unless you're talking solely about people in the finance industry, I don't think people understand that for an instant, but rather, consider a bank statement to be on par with a warehouse receipt. Especially since the FDIC "insures" against the bank being unable to meet it's obligations to pay upon demand.
I'd bet the majority of people who work in commercial banking cannot even properly define what a dollar is, let alone it's classification upon deposit in a bank.
Try explaining to a liberal why there actually isn't any significant money in the Social Security Trust Fund.
'Finance' guys often get stuck on the idea that a treasury is an "asset."
So is my promise to pay you next Tuesday for a hamburger today. It's just not an asset like the hamburger is.
Of course, promises aren't 'money.' To the extent people may soon be literally working merely for food - hamburgers could be.
"I'd bet the majority of people who work in commercial banking cannot even properly define what a dollar is, let alone it's classification upon deposit in a bank."
Boy is this the truth. Their management does, though. A few years ago I had a real, bona-fide demand deposit account -- you know, the kind that requires the banks to have actual reserves in place. Every time I was in the bank I got the hard sell to move to a moneymarket account, and the teller's expression when I explained they were being incentivized to move me because it changed the bank's reserve requirements, well, it was nice and glassy-eyed.
Shit, you can't even get real demand deposit accounts now at most banks.
you should be more explicit and say "... passing understand of CURRENT banking...". Any "passing" understanding of the history of banking shows that depositors weren't always such fools.
no, 99% have no idea.
At some point the return on loaning money is simply not worth the risk! Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.
It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward. When this happens we are at the end game. The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.
http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html
U shaped interest rate curve
Bitcoin + 11% today.
There is nothing wrong with currency deposits being called currency.
Money does not fail. Currency backed by either money or credit can fail if the credit on the other of the bank is crap.
It has always been the case during the Gold Standard.
If deposits are allowed to fail there is no point if trying to backstop them with money printing.
And if there is no need for money printing, why not going back to Gold standard.
However this is just all theorical. The Banks are gorging themselves up with Gov bonds because they know politicians will always prefer printing than allowing gov bond go sour. That is why people should be on a inflation resolution to the excess of debt to GDP rather tahn on deflation.
Either way deposits lose (with haircut or with inflation -- which is another form of haircut).
As soon as bank deposits do not trade at par, or at 100 cents in the dollar its basically all over for banks.
What on earth could go wrong?
If you've been involved in receiverships at all, you know this is big news. Depositors now in line with other debtors. Implies that you will take a loss in order to protect bigger fish. You must withdraw your money and only hold enough for day to day transactions.
Bank at home?
Before we get too carried away:
"As the world’s smartest lawyer Charlie Munger is also fond of saying" : "I think gold is a great thing to sew in to your garments if you're a Jewish family in Vienna in 1939 but I think civilized people don't buy gold."
What that boils down to is that Munger said that Jewish Families are not civilized.
The delivery of the veiled insult is truly an artform.
What IF the idea is to flush out the cash and then kill it? Issue new currency. If you we're doing as you're told and holding your "cash" in the "approved" financial institutions then you'll NOT loose everything (a trim, but not a complete wipe-out).
Most folks really don't have much in the banks anyway. And most don't have much outside of them either. BIG business does, and I hardly doubt that TPTB are going to set BIG business up to get wiped-out.
Just another angle...
In order to implement something like this, any government would surely have to outlaw physical bank notes. It is a guarantee.
EXTINGUISHING OF RESERVES, as there is no other solution.
The only issue is: Who's reserves?
And.....prepare for war. No country can implement this in a peaceful manner.
As I have always said, you can't hide electronic money.
This is the last effort of bank lobby to survive, extinguish people's reserves, not offshore account reserves.
PREPARE FOR WAR, real war.
Obviously what you say is true, and we've been witnessing "who's" reserves will be extinguished for decades.
The plan has been, and will be -- to print. That means everyone shares in the pain of losing a few percent a year to inflation. This fits in nicely with the progressive view that everyone is in it together... call it a shared sacrifice.
Obviously the banksters have their asses covered by their to big to fail mutual assured destruction. Yes, it's war and they have won.
The rest of us have to be productive, and we can protect ourselves with guns, gold, beans and bank accounts under the insurance limits.
‘In Youngstown the bank deposit, an asset previously referred to as "money", had fallen by up to 40% relative to the value of cash’
Negative interests rates produce the same affect. Put $100,000 and @ –2%, pull out 98K a year later.
Stashing the cash in your basement rafters can result in confiscation during an ‘accidental’ no-knock warrant.
Not to mention the cash itself devalues at 2-10% per annum due to inflation.
The entire fucking thing is rigged nine ways to sunday. Even gold won't work well once the crisis happens, but only years later.
Tangible goods that are well hidden is the only thing I can think of to store wealth. I've got some dry powder and I'm genuinely stumped on where to put it these days.
drop some into BTC.
Put it where Jay Leno puts it, only a slightly smaller rare car collection. Notice how art is bringing in record bids? Weimar Germany.
Me too. But I still think hard assets like PM's, including a little platinum, home with zero debt, some bitcoins, some diamonds and stones, if you now what you're doing, cash on hand, food storage, maybe stocks in essentials like energy, would be good places. All that stuff is going to be easier to pass on to children and family later on anyway, too.
Indian Reservations are Sovereign Territory, so it would not be unwise to have a boating accident at an accessible location within. Remember to leave cell phones, OnStar and other IRS tracking devices at home when recreating with boats.
I guess we should all think "Ignore at your own peril"
Or you could keep the keys to your bitcoins in brains only and do away with storage, physical security and any third party services and counterparty risk.
That is way too far ahead , most of these guys still think the earth is flat.
"The dangerous illusion of the elites is that they consider themselves as something separate from the masses, as not being part of the society and therefore they can go away, as always in the past, in case of a massive, ugly collapse. This illusion is based on the fact that everyone operates through the same terms. Everyone seeks more money, either to survive, or, to climb up the social hierarchy. In reality, this is the recipe for the perfect destruction."
http://failedevolution.blogspot.gr/2014/11/revolution-evolution-or-revol...
Well, so "smaller" deposits protected by the FDIC in the US or similar in other countries, are still protected.
So I don't see what's new here, I'm not sure what the case was with large deposits even before 2008.
Uh, no. Dodd-Frank (the US version of this) is pretty explicit, they can take all depositors money. They just have to give equity in return. A $500 balance doesn't exempt you.
Now, in practice, they might try to protect small depositor's accounts, but rest assured that's a litigation nightmare.
Basically the rules were completely changed in 2010 when DF became law. It's the setup for the next collapse.
Excellent point
game of falling dominos cascade planning rock hopping
Total Savings Deposits at all Depository Institutions 7.5 trillion. FDIC total fund 100 billion on a good day. Figure out the math. YOU WON'T GET YOUR MONEY BECAUSE YOUR NOT IN THE CLUB.
Scrooge McDuck vaults coming to a neighborhood near you.
Safes and vaults are the first place the civil asset forfeiture thieves will look.
Disclosure: long coffee cans.
It ain't easy out here for a Canadian...in the U.S. Canadian tourists are like sitting ducks with their spending cash and all. Heck, Mexico is safer. I've been busy warning Canadians about civil asset forfeiture because the 'Mericans won't listen.
It's not just Canadians, it's anyone.
People who don't think the US is an emerging police state need to realize that we're now at the point where people have to put effort into hiding their own money from government agents just to keep it, at a time when 80% of government seizures of such money are found to have no legal basis.
I know the joke about gold being useful sewn in Jew's coats leaving 1939 Germany and nothing else, but seriously, to travel by car in the US you have to do the same thing!
Plastic or traveler's checks/checking book. Really not that hard and an easy work around.
Thanks goodness, one sane person. Piles of cash at home or the car... ever heard of fires or theft? What imbeciles!
used paint cans full of junk silver, and sand - to keep it from jingling.
Use 2 safes. The decoy, with a couple of hundred euros, and the real one.
Right...
So if the biggest holders of "deposits" happen to be
SWFs, how do you tell them they're SOL???
Think Russian money in Cypriot banks scenario of a few years back???
Think those Tu95s patrolling off the US coast can't unload their
cruise missiles in less than a few minutes???
What about China??? or the UK, or France... it does get pretty
unreasonable pretty quickly...
!
"Bail-ins"?!!!
Just a bankers version of "civil forfeiture"!!!
I doubt that more than one American in 10,000 knows that their sacred bank account is vapor--that he or she is a low-level unsecured creditor of the bank the moment the cash is handed to the teller--and that the FDIC is meaningless in the case of wholesale systemic failure.
Thanks, smirking whore Dodd.
Thanks, greasy sassy bitch Frank.
Don't even get me started on that steaming pile of poo poo posing as a financial reform bill known as Dodd-Frank.
Thanks to votes from fake conservative senators the Dodd-Frank financial reform farce became law. Fake conservatives senators such as Scott Brown who drove his fake pickup truck down to Washington to vote for it during his brief term as Massachusetts senator.
I've warned everyone I care about. F--- the rest!
I've warned everyone I care about. F--- the rest!
+100000000000000000000000000000 (Adjusted for hyperinflation)
I think at this point Up-Votes should actually be adjusted for inflation, we should get 100 Up votes for each click instead of just one.
RAISE THE MIN. WAGE FOR UPVOTES ON ZH.
We can then "Tax" the upvotes and use them to buy Health-Care from Obama.
We can just derivative and securitize the value of an upvote, and adjust its value for "quality".
Were this a sane world, snipers were be positioned within the necessary distance from every banker's home, including Greenspan, Bernanke, Rubin and the warning, "when the dollar collapses and the market falls, so do you," written as the headline of every website, newspaper and magazine.
https://www.youtube.com/watch?v=nE-oJ-u1X7E
Connect the Dots - Long video, well done on 9-11 and the subsequent lockdown of America and all developed nations.
It's so funny, all the stupid people who actually believe they have 'money' in their deposit accounts.
Whats sad is, people still beilieve in Debits and Credits.
When there are just Credits on both side of the ledger.
Money = Debt
Credits = Debt
Debits = Credits
Credits = Credits
Debt = Debt
Best you could describe a Debit is , its just a nested Credit.
Thus our entire accounting system is fraudulent.
So the money in your wallet is different than the money in your bank account.
So Deposits = "Online Shopping Tokens"
and
Cash = "Real World Shopping Tokens"
and
Gold and Silver = "Luxury Collectible's"
and
Bitcoin = "Anarchy Money"
and
Everything is going to shit.
Pretty much only thing that can't disapear is the dirt under your feet, thats about the only thing you can count on not instantly vaporizing these days.
"liabilities that the bank has by virtue of holding client assets". Why isn't that deposits?
Silver, Gold, and lead (ammo).
“a “bail in” for large-scale depositors…”
I doubt there are any such “large-scale depositors” on this planet, unless they are very wet behind the ears.
By “large-scale” I mean any individual or company with bank deposits over the amount “guaranteed by a government agency”.
According to these guarantees, that portion of a deposit over the guarantee ($250,000, in America) will be lost if the bank is declared insolvent by the FDIC.
How do “large-scale depositors” protect against this possibility? This problem gave rise to the so-called zero-balance deposit account (it goes by many names). Initially, all funds in such accounts would be swept into US Treasuries at the end of each day. Then, if the bank failed and was seized by the FDIC, all such depositors would lose nothing since their funds were held in US Treasuries.
This is why, where companies used to list “cash” as the first item on their asset statements, they began to list “cash equivalents”.
Then, a new problem arose: companies around the globe had the same problem, and had very limited investment opportunities at the end of each day. The problem? Not enough US Treasury securities. This, in turn, fueled the demand for Mortgage Backed Securities (MBS), on a global scale.
Then, the fraudulent nature of MBS was exposed, which left “large-scale depositors” with losses they dared not report. So, they sold these MBS to the Federal Reserve. Losses on these MBS then became liabilities of the US Treasury, thru its cutout, the Federal Reserve.
It’s a long story. Suffice it to say that all issued Federal Reserve notes (the scrip we carry in our pockets), all US Treasuries owned by the FR, all MBS owned by the FR, all US Treasuries owned by foreign institutions are all collateralized by a piece of paper the Federal Reserve lists as “gold certificate”, which in turn is collateralized by a line on the asset statement of the US Treasury listed as “gold and gold receivables”. This, of course, indicates that there may or may not be any gold at Fort Knox.
The problem now is to make the Treasury’s “gold and gold receivables” equal all those liabilities listed in the previous paragraph. So, the real question is ‘What gold price is necessary to establish that equality… $7000… $70,000… $140,000… infinity?’
Oh, there’s another question: ‘When will the market discover this equality?’
None of this is new.
It has been the case since 1811 and I hold only the minimum required to pay bills and such in my bank account. The rest gets kept as cash. Particularly since I'm not being compensated for the risk of a bank collapse.
Taken from the cobden center. http://www.cobdencentre.org/2010/09/the-legal-relationship-between-the-b...
Best bet is to withdraw your cash on Friday and redeposit on Mondays. Haircuts are usually announced after closing on Fridays.