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Thanks to Jonas Parker for the video (thanks for everything!)
Pay a visit to your bank, ask around, maybe withdraw a %. Don’t panic, just ask around and use your head. It's better to be cautious these days folks.
Bank runs suck, and they are usually the begging to a fast collapse. But loosing your money to your bank sucks even more. It’s your money, your work and effort after all, don’t let them make you feel guilty about withdrawing it. Bank owners wont lose their money, that I can promise.
Don’t be the one banging on closed bank doors, crying and begging for someone to give you back your money, that I've seen and it’s not pretty.
You dont want to be these guys:
Corralito in Argentina.The funeral flowers (green donut) in the hands of a protestor read: "National Constitution".
FerFAL
9 comments:
Ah yes, the California state IOU, the "registered warrant". Not exactly an Argentine corralito, but bad enough. Basically what this is, the state of California ran out of money, so they're paying state workers and vendors with worthless checks that can't be cashed.
The checks supposedly come due on October 2. Will they make good on them? Who knows? The banks took them for a week and then said go fish. My bank took them for three weeks, yay to me for switching banks 18 months ago! :)
Anyway, I live in California's capital city where a tenth of the workforce works for the state, so this is big news here. Try http://www.sacbee.com/ (local paper) for coverage. I personally decided to take only cash for my business, I'm returning the way overpriced credit card scanner they leased to me for $75/month.
I have yet to find a trustworthy metals trader. Cambios are all over the place, it's finding somebody like the Asian guy in that video that's the problem.
I happened upon a list of the hardest hit US banks a month ago. If I come across it again, I'll pass it along.
Pezar
Fernando:
http://www.sacbee.com/business/story/2017828.html
From July 11. This details the California Corralito established by the banking oligopoly.
Ok, I watched the WHOLE THING, and while they start talking about the IOUs, they go into something different. The government has LONG mandated withdrawal limits. Under fractional reserve banking, the bank only keeps a few thousand dollars on the premises at once. This started in the 1970s. It is usually not a problem.
The thing is, when a bank run starts, everybody tries to withdraw at once. That's what happened in the US in the 1930s where you have hundreds of people at the bank in these old photos. In 1971 Nixon was concerned about a new rash of bank runs, so he imposed a withdrawal limit. It's been law ever since.
It's possible that we may see bank runs here in the US soon, in which case they will likely just shut down the banks as in Argentina. Most people so far will NOT try to take out more than $5k at once, so the banks are safe-for now.
I have been considering only keeping in the bank what I need to pay bills since the phone company, electric company, etc will only take checks in the mail, and taking out the rest maybe $100 at a time. I think I will do that.
The US government seems to be ok with the risk of hyperinflation. The upside is that the value of all debts is diluted. So what if we have several trillion in debt-just reduce the real value of a trillion! Easy! It's really a form of hidden taxation that reduces the value of every monetary asset. Life savings will be worthless, but the amount owed on mortgages will be reduced as well. Looks like we'll all be working until we die. So much for retirement!
FerFal,
Banks in America keep only about $100,000 in cash, because of insurance regulations.
TheStreet.com has ratings re the strength of specific US banks -- see
http://www.thestreet.com/bank-safety/index.html?src=ratingsindex&tab=3
Re the reliability of the Above ratings, I have an example. I grew up in an obscure town in Virginia and my father always used a specific bank in that town. The reason was that the bank was conservative about risk -- and my father remembered his grandfather talking about the bank being open during the Great Depression when many others failed. I checked the rating on that obscure bank and it has an A (best) rating. There are relatively few banks in the USA with an A rating.
@Bones:
Inflation is a kind of tax, a tax on people whose wealth is essentially money. That's people like me, to some great extent since the substantial portion of my wealth is my earnings potential (i.e. the dollars in my future paychecks).
People whose wealth is stuff, though, are taxed less. My land will appreciate because it has inherent value. So will my house. But while these are part of my wealth, they don't compare to my future income.
It is probably true that the very wealthy and debtors (with fixed interest rates) are the winners in an inflationary environment. Debtors because they can pay their debt with cheap dollars and wealthy because their wealth is generally "real."
Actually, inflation in the USA is a heavy tax on the wealthy, in my opinion.
Over time, the wealthy build up capital as various industry sectors boom. When they manage to elect a politican who favors low taxes ON THE RICH, they are able to convert much of their capital gains into After-Tax Wealth (in the Bush era, capital gains tax was cut to a very low rate.)
That "After Tax Wealth" is IMMUNE from further government taxation under the Fifth Amendment of the US Constitution -- the prohibition on government "taking" of private property without compensation.
In contrast, the life savings of America's Middle Class are held in 401Ks and IRAs and are largely in Before Tax dollars -- which can be taxed at as high a rate as a future governments want. At 95 percent if need be.
Of the $11.5 Trillion in US Federal debt , $9 TRILLION was incurred under the personal signatures of "fiscal conservative" Presidents Ronald Reagan, George H Bush, and George W Bush. If you can't "soak the rich" then Guess who is going to be stuck with paying off that $9 Trillion in the decade to come?
US politicans have been collecting taxes from middle class workers for 40 years via the lie that those funds were being put away in government accounts for the workers retirement. Well, guess what. The huge Baby Boom generation is about to retire and their retirement funds -- Social Security and Medicare -- are short by $40 TRILLION. Even the "assets" of those funds are fiction -- George Bush paid for his tax cuts by stealing $3 Trillion out of the Social Security/Medicare Trust Funds and replacing the money with US Government bonds. But those bonds are worthless to retirees -- since the retirees would have to pay taxes to make the bonds worth anything. Kinda like a banker taking $100,000 from you and giving you an IOU. When you read the fine print, the IOU says that you owe yourself $100,000.
So Obama and future Presidents have been left in the position of having to heavily tax middle class retires IRAs and 401Ks savings in order to come up with enough money to write Social Security and Medicare checks for those very same retirees. Kinda a "Rob Peter to Pay Peter" scheme.
Face it -- chickens are coming home to roost in the next decade and someone is going to be badly screwed -- and if you don't know who, then it is probably you.
The one way to finesse this is to have a decade of high inflation -- enough to double the market value of After-tax Wealth held by the rich. Then orchestrate the economy in a way that forces them to sell -- and tax the inflation-based gain in capital.
E.g., a Rich guy owns $1 Million in property today. If you have 10 percent inflation for 10 years, it will be worth around $2 Million in 2020 dollars, even if its real value has not changed. So when the guy sells, you tax the $1 million in "capital gain" at ,say, 80 percent. End result is that the real value of his property is reduced to 60 percent -- i.e., you've grabbed 40 percent of his otherwise protected wealth.
As they say in poker games, "Read 'em and weep."
Don W, I am disabled and I have been on SSI or a variant (American pension for the disabled) most of my adult life. I can work, it's just that I have a hard time with interviews, since I'm mildly autistic.
I am not stupid, I know that the era of "sweet money" as Fernando called it in the book is about over, which is why I got a useful skill when I could and now work for myself.
Unfortunately a LOT of baby boomers who have lifted pencils for a living their whole lives are out of luck, they have no skills and no pensions and soon no Social Security or Medicare. They will likely spend their golden years camping by the river in tents and recycling books for food.
Argentina recently seized all the 401k type plans in the nation and nationalized all the assets, and I expect Obama to eventually do the same. People like my parents who worked for the government all their lives and who have union pensions and the old age pensions will likely lose everything. They never believed this day would come, so they didn't plan. They thought the stock market would go up forever and that govt plans were guaranteed.
I know that most autistics live off govt assistance, and when it stops they'll likely just starve. The good thing is, the disabled have no savings. Some baby boomers have life savings to lose.
P
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