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RE: Resident of Texas!
hahaha! I'm glad you're so cheery about it!
where do we keep our money then, and does it matter what bank? ours is a locally owned bank, not a national one
you think we will lose the Reserve Currency status that soon?
If the big banks fail, the Dollar will fail, and even the well run, smaller banks will fail because they deal in dollars. It will be the same thing that happened to the Confererate money after the Civil War.
Over a dozen countries have signed trade agreements to begin doing business in Yuan, ant ar some point the Saudis will join in ans a few trillion dollars will come back home and the US economy will be up to its knees in dollars no one needs.
Or, A big bank could trip over a derivative, its counterparty bank could fail, and a cascade of dead banks would follow. That could happen any timel
Stack bullion in a hole somewhere and hope.
Or, maybe Divine intervention will prevent it all. I can't think of anything else that would stop it.
howdy this fine Sunday @willymac! Well sir this is a depressing topic for Sunday but it sure is important to understand.
So do you just keep a small amount in the bank to operate your household on?
you are saying we shouldn't keep savings in the bank?
oh, and the Fed can't make up money out of thin air and loan it to the banks if they get in trouble?
sorry for all the questions but this is pretty alarming, I think you should do a series of posts on this.
Hey, Tex! Yep, it is a disturbing subject and it gets downright scary the more you learn about how fragile banks are. Of course the govt can borrow more money to give to the bank but all that does is add to the debt on the national credit card that we already can't pay off. Besides, why should the citizens bail out a bank that made bad business decisions to keep it in business if they would not do that for Joe's garage down the street? Why should a bank business have an immunity from their own failure?
Keeping a minimum in the bank means that is all you will lose. Getting extra cash out means it is not in the banking system and at risk.
Think about the basic flaw of a bank telling the govt, "I made bad decisions and I lost money and I'm gonna fail."
The govt says, "okay, Bank, here is an extra computer zero. Add it to your cash on hand balance in your computer."
The bank types a zero on the right side of their cash on hand amount and they suddenly have ten times as much money on hand. Now, they can make more loans like crazy and all is well.
Will walks in and asks for a loan to buy a used tractor and the bank adds $6,000 to his account by keying in $6000 after Will signs a paper saying he will repay.
Will goes to the tractor dealer and writes a check for $6,000 and takes the tractor home.
The tractor dealer goes to the same bank and deposits the check in his business account, increasing it by $6,000.
The bank now has $6,000 - 10%, or $5,400 more dollars it can loan to someone else!
Does it seem like maybe something is wrong with all that?
Is anything actually backing the transaction?
no sir, not a thing is backing any of their transactions!
the scary part is that all could collapse at any time!
keep informing and educating sir Willymac.