Are Your Bank Accounts Safe? Part I of II
The short, intermediate, and long answers are not necessary! However, many public members must be aware of the risks of their checking and savings accounts being unsafe from government seizure. This is not a distant possibility but a pressing concern that demands immediate attention.
When Washington Mutual collapsed, it triggered the most significant bank meltdown in the U.S. since 2008. Silicon Valley Bank was taken over by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver. With deposits totaling 173 billion dollars, only $250,000 per depositor was insured. This meant that only $4.8 billion of the deposits were fully insured, leaving a staggering $ 168 billion to be absorbed by the Bankruptcy Court. This legal process allows individuals or businesses to have their debts discharged or reorganized, but it also underscores the potential risks of banking.
Once considered a haven, the U.S. Banking system has become the riskiest place to park more than the insured threshold of $250,000. This significant shift in perception should raise immediate concerns for those with substantial savings and investments.
The FDIC insurance limitation is $250,000 per depositor. Deposits in the few banks that are too big to fail, which the government owns, are the only safe place. If they give directions to political parasites, then a future bailout will happen as it did in 2008.
- Among the best alternatives are purchasing real estate trust deeds or mortgages with protective equity. These investments offer a tangible asset and a potential for significantly higher returns. Making a loan for $100,000 when the appraised value is $150,000 is a good bet. You have a 33% equity cushion, providing a safety net for your investment.
- The worst-case scenario is that you will foreclose and own an investment property. Of course, trust deed investments come with risks. Spreading proceeds into many investments and diversifying investible capital are excellent ways to invest money today.
The government's propensity to create and pump seemingly unlimited trillions of new fiat currency into the economic system. Injecting absolute fiat currency has and will continue to occur under the guise of monetary stimulus and financial improvements.
There is a direct book U.S. debt of $36.5 trillion, unfunded and underfunded obligations of between 160 -200 trillion, and mysteriously missing or unaccounted-for monies of $21 trillion (about $65,000 per person in the US). Since the bottom half of taxpayers contribute 2.5% of the taxes, and the top 20% contribute 83% of the taxes, the debt of the top 20% is over $6 million per taxpayer.
As a result, we face significant economic challenges because the government does not intend to pay past, current, and future commitments. The strategy is to kick the debt down the road and hide it from public scrutiny. Just create more debt through executive orders or pass more phony stimulus bills into law to ensure the purchase of future votes. Every aspect of government spending today is a giant Ponzi scheme hidden to purchase votes.
Debt Clock:
It is estimated that 40% of the government's money is created out of thin air, which dilutes the value of the hard-earned currency and the corresponding work effort. Members of taxpayers work, expend effort, earn income, and pay taxes for the remaining 60%.
The government merely creates new money without effort, work, or competition. It can spend 100% of whatever it creates from fiat on its preferred pet projects, such as infrastructure development, healthcare, or defense. Favored groups like labor unions, both public and private, and monopoly institutions like public education are always taken care of, which no productive enterprise could accomplish.
Another reason is the U.S. Federal Government's policies toward forced/mandated near-zero interest rates for savings and lending. Zero-Interest-Rate Policy (ZIRP) is the term used to describe this policy. Those days have finally ended, only 36 months (about three years) too late.
The Zero-Interest-Rate Policy (ZIRP) has had a profound and lasting impact on banking savers and investors who put their money into real estate and other capital-intensive assets. This is not a temporary situation but a new norm. ZIRP encourages excessive risk-taking and speculation, disregarding market fluctuations as if all investment assets will continue to rise indefinitely. This irresponsible policy has led to a bubble in all asset classes. It's crucial to be aware of these changes to protect your investments.
The ZIRP policy constituted the government's expropriation of private assets. It includes the unconstitutional taking of private property (banks, checking, and savings accounts) away from tens of millions of hard-working folks who prefer earning interest income, liquidity, and immediate access to cash.
ZIRP was a fraud perpetrated against the public and constitutes the most significant massive transfer of wealth in the history of the world. Governments openly promote this policy as their answer to how to produce positive economic activity. At the same time, corporations and governing elites are entirely in control of mainstream media. Mainstream media are their lapdogs as recipients of advertising dollars. The mainstream media and large corporations have mutually beneficial symbiotic relationships.
Wall Street banks used a 'financial repression' strategy to balloon high-leveraged profits and artificially inflate stock prices. Financial repression refers to government policies that result in bank depositors earning interest returns significantly below the inflation rate. Banks can provide super-cheap loans to consumers, corporations, and governments, reducing debt burdens.
Depositors have always been cheated because this process creates inflation, which reduces purchasing power, but corporations and governments benefit.
Stealing wealth from the public works beautifully when Wall Street banking oligarchs and giant corporations are 100% in control of government. Through lobbying and political contributions, the elite group in control can engage in institutionalized theft. They have taken corporate and bank stocks on an unimaginable upward trajectory.
The term bankster is pejorative, implying that the banking industry may make money through illegal, highly irregular, or unethical tactics. The process may be legal, but taking advantage of one subset of the population (usually the middle class) for the benefit of another (upper-class financial elites) is highly unethical. This exploitation is unsustainable, and it's time for the public to be aware and demand change.
What would happen if the depositor public acknowledged this fraud perpetrated against them and, as a result, created an action plan to pull most of their money out of the banking system all at once? How about a national and international run on the bank? How about the public deciding to keep most of their deposits in cash or movable assets, such as gold, silver, or cryptocurrencies? How about the people getting fed up and discontinuing purchasing all the stuff that is not necessary for existence?
Between ZERP and the issuance of unlimited trillions of fiat currency into the system, we have created a giant bubble of everything in the world that has ever existed. The only actual beneficiaries are the wealthy 1% who operate with high-leverage formulas referred to as financial repression. Since these folks also control the government, this becomes a form of monopoly crony capitalism, a recipe for self-gain.
Issuing fiat currency is not backed by a physical commodity, such as gold or silver, but only the illusion of the government's full faith that gave it. The U.S. can only get away with this because of its position as a world reserve currency holder. Nothing else! There may come a time when purchasers of U.S. sovereign debt dry up, and no one will agree to invest in our treasuries.
The third reason is the cancellation of the fractional reserve banking system, which has existed in the U.S. since 1791. Banks must keep a small fraction of deposits as cash on hand and available for operating capital or withdrawal. As of March 26, 2020, the fractional reserve banking system was replaced with a zero-reserve system.
Banks are no longer required to keep reserves on hand for safety. If a bank needs extra cash for excessive depositor withdrawals, it can borrow money overnight from the Federal Reserve.
Economic losses were and will be transferred to the public. If the economy crashes, these same banks will demand a bailout of their financial troubles from the U.S. taxpayers. They can rely on getting bailouts because the elites who control banking are the same elites who control the government.
The fourth and equally dangerous reason is the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Can the government legally confiscate your checking and savings accounts?
Yes, confiscating your checking and savings account balances is possible for many hard-working families. The fact that you and your family took significant risks over many years to invest and accumulate substantial savings accounts does not create protections. The Dodd-Frank Act of 2010 has provisions to allow for the seizure or confiscation of private checking and savings accounts from private parties.
This confiscation process of private party assets is designed to protect insolvent giant banking corporations (Federal Reserve Banks), phony government (FDIC) insurance promises, Wall Street Corporate Investments, and the administrative State. The status quo is still well-seated and remains the goal.
The Dodd-Frank law from 2010 has provisions for a Bail-In in place of a Bail-Out in the event of bank defaults:
A mechanism for any subsequent bank bail-out is now in place and ready to trigger immediately. The government-backed bail-out of large banks and financial institutions that become insolvent and default for any reason will now be rewarded with a bail-in provision. The Federal Deposit Insurance Corporation (FDIC) will oversee what is referred to as an orderly liquidation of defaulting banks.
An orderly liquidation of the insolvent bank(s) transfers wealth away from individual private parties onto the accounting books of the significant (defaulted) banking institutions. The depositor's checking and saving assets will be legally seized or legally frozen and swept (confiscated) to keep the defaulted banks solvent. Dodd-Frank allows the government to seize up to 50% or more of the account balances.
Your safety deposit box contents may also be frozen and confiscated. The potential risk should serve as a reminder that keeping anything in a bank safety deposit box is a bad idea. At the same time, as a declaration of bank insolvency, bank stockholders will lose their stock equity. Stockholders of the banking corporations will lose their equity unless they are friends of the government (FOGs) and will expect to be bailed out, which is the usual case. Crony capitalism occurred from 2007 to 2008. It has not changed.
In exchange for confiscating and losing the privilege of owning your hard-earned money in checking and savings accounts, private depositors may be given an equivalent number of shares (stocks) in otherwise insolvent banking entities. They are given draw rights in the future for a small percentage of the account balances not confiscated. The process would force the public to take an illusionary or phony future asset in exchange for the hope and promise of returning it for up to 30 years. A net present value calculator would prove that the depositor who has had his assets confiscated has been underwater from day one while waiting for up to 30 years.
Poof, you may be driving to work listening to the morning news, and you hear something that does not sound real. You may listen over the radio that the government has lawfully stolen your checking and savings accounts. Leaving a portion of your savings and checking it in your bank account and making it available to you to withdraw will be designed to reduce rioting and social discord.
Digital Currency System:
The Federal Reserve is installing virtual currency to replace paper currency. Early adapters sell the replacement system as potentially beneficial for consumers without bank accounts.
The benefits are guesswork and challenging to measure, but the downsides are significant. All forms of digital currency would be traceable, taxed, and manipulated to benefit preferred groups and political beneficiaries.
Those non-compliant folks or political enemies could be locked out of the system temporarily or permanently. How would you like to make your rent or house payment, go to the grocery store and gas station, and discover that you have been locked out of the system? You may have credit cards as a backup. Credit cards may also be frozen because the government controls credit card companies.
A bail-in action by the government would be easier with a financial system of digital currency.
Remember the phrase, You can take it to the bank. The catchy phrase means that a third-party source can verify something as accurate. The question is assumed to be reliably safe. Well, the new saying should be do-not-rely-on-receiving-your-money-back-if-you-deposit-it-in-the-bank. You are better off with your deposits held in small regional banks or, better yet, state-chartered credit unions.
I have researched the above subjects through various data sources. There may be conflicts, especially with time and different data sources.
In Part II, I will expand the conversation to include what actions the U.S. Government and large major financial institutions have taken that are harmful to checkers and savers who maintain balances in their chosen banks.