By Craig R. Smith and Lowell Ponte
Americans were shocked to learn that a paying customer could be violently dragged off an airliner because United Airlines wanted to give his seat to someone else
40,629 people who had valid tickets have been involuntarily bumped from airliners, because airlines are allowed to sell more tickets than they have seats on each flight. But millions of us risk losing our savings because banks are allowed to lend long-term, or in other ways gamble by speculative investment with, the money they take in as short-term demand deposits. Our banks are a lot like United Airlines!
Most of us still assume that putting our money into a bank makes us safer. Instead, under current law you do not “own” your bank account. The bank does and can put it at risk, The government, under “bail-in” rules established by President Barack Obama, can confiscate every dollar in your account as “assets” that belong to the bank, not to you.
Why, if you try to withdraw more than a small amount from your account, could your bank refuse to return the savings or retirement cash you entrusted to them? This is now almost routine at American banks.
And why, if you are lucky enough to withdraw your money, will the bank report this transaction to the Internal Revenue Service? (Surprise! Your bank is now required to spy on you by the government.)
In our free, updated 2017 White Paper Don’t Bank On It! Executive Summary, we explain 20 major reasons why your bank has become one of the riskiest places to put your money.
This began centuries ago, when people paid the goldsmiths of London to keep their gold coins in safes. The goldsmiths gave out paper receipts for this money, which depositors began trading with others like money. Most people left their gold untouched, so the goldsmiths began lending it for interest.
This was the beginning of “Fractional-Reserve Banking.” The goldsmiths gambled that if they kept a fraction of these gold deposits, they could pay the few customers who might suddenly want their gold back. Trouble was, if a national crisis happened, or if depositors lost faith in the goldsmiths, they could start a “run” on these bankers, with everybody demanding their lent-out gold at once. This could cause the system to collapse.
American banks practice such Fractional-Reserve Banking today – using short-term demand deposits to make long-term loans. The Federal Reserve now supposedly keeps banks reliable by using dubious “stress tests” to show that your bank has one percent to 10 percent of its assets in reserve.
After many lost their bank savings in the Great Depression, the government also created the Federal Deposit Insurance Corporation (FDIC) to insure bank accounts. Trouble is, the FDIC has only $25-$50 Billion in reserve, and in the most dire emergency might be able to scrape together half a trillion dollars.
This sounds impressive until you learn that the FDIC insures over $7 Trillion in bank deposits. It could cover at most only $1 out of every $14 deposited in American banks – roughly 7 percent.. If even one of the six biggest banks failed – because of hackers, cyber terrorists, a major bank run by customers, or many other causes – the FDIC might be unable to cover depositor
losses. Printing new dollars to cover this would destroy our currency’s value.
We have only “fractional reserve insurance“ covering our Fractional-Reserve deposits. The government is rushing to impose a “cashless society” because we have vastly more debt than we have money to pay it. If people wake up to this, our economy based on debased paper money would collapse.
No wonder that a veteran Harvard economics professor withdrew his life savings from one of America’s biggest banks. It’s a good time for all of us to take out our own “savings insurance” by moving a portion of our assets from shaky government dollars and banks into reliable hard money that will go up in value if the government economy built on mirage money goes down.
To schedule an interview with Craig R. Smith or Lowell Ponte, the co-author of seven financial books whose writing has appeared in the Wall Street Journal, contact: Sandy Frazier at 516-735-5468 or email firstname.lastname@example.org.
For a free copy of the 2017 updated White Paper Don’t Bank On It!, contact: David Bradshaw at 602-918-3296 or email email@example.com