Scared Money Flows to Coins?

[jeff of pa]

By Patrick A. Heller
April 01, 2013
With Canada, New Zealand and the Eurozone nations announcing plans to implement or study the idea of confiscating at least some portion of the checking and savings accounts at faltering banks, I anticipate that worldwide use of banks in general could see a falling demand in the next couple of months. However, just because funds are withdrawn from banks doesn’t mean that they disappear. The owners of these funds will have to stash their funds somewhere, or else use them to purchase assets. I have heard repeated reports that citizens in the Eurozone are again stuffing mattresses with paper money. But that is not the only option that former bank account holders are selecting.

Scared Money Flows to Coins?

 

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[TreasurePirate69]

Talk about misinformation.... Canada, New Zealand, and the Eurozone are not announcing plans to confiscate money from checking and savings accounts. What they ARE doing is studying the idea of bank "bail in" rather than "bail out" which helps to increase the amount of money that creditors may get returned to them in the case of a bank closure. We have some of the same ideas as part of the Dodd Frank legislation.

Be sure to google for "bank bail-in" for more information. Here is a very good discussion of some of the important details.

http://www.imf.org/external/pubs/ft/sdn/2012/sdn1203.pdf

 

[jim4silver]

Each day we see more instances of how broke some country or other gov entity or institution is, and as a result of that sheeple lose their money or other "vested" benefits. I read that the city of Stockton might be allowed to reduce pension payments via federal bankruptcy court even though state law forbids such. I believe the federal Judge has not ruled on that issue yet, but I might have read it wrong.

In any event, we are reminded each day, whether it be Cyprus, MF Global or pensioners who might be getting screwed later, how important it is to have at least some if not more of your assets in a form in which you possess. It may be something other than PMs as long as there is no counter-party risk in owning the asset (meaning you don't have to depend on some person or entity down the road to deliver said asset to you).

As more bad financial events happen over the next few years (I believe there will be many more all over the world), eventually the sheeple will figure out that institutions that might have been safe over the last 50 years or so have changed and the need for direct asset ownership whether it be PMs, artwork or cash in the mattress is now essential.

Remember when everyone was so concerned about gold or silver confiscation?

Just my opinion.

Jim

 

[Jason in Enid]

I saw an interesting report about the fact that the US govt's continual pumping of dollars into the banking system to keep the interest rates at artificially, and ridiculously low levels is what is causing the stock market to soar despite current economic conditions. Nobody buys bonds when interest is low. When the gov't eventually stops propping up wallstreet, it's going to crash, and hard. When that happens, the PM market will skyrocket.

The current confiscation of cash from bank accounts in Cypress is being discussed as a viable solution in other European countries. This WILL cause at least a European bank failure, and likely a worldwide one. What happens to any markets when the banks crash is a mystery. Guns, ammo, PM and alcohol are always smart "investments".

 

[TreasurePirate69]

Each day we see more instances of how broke some country or other gov entity or institution is, and as a result of that sheeple lose their money or other "vested" benefits. I read that the city of Stockton might be allowed to reduce pension payments via federal bankruptcy court even though state law forbids such. I believe the federal Judge has not ruled on that issue yet, but I might have read it wrong.

In any event, we are reminded each day, whether it be Cyprus, MF Global or pensioners who might be getting screwed later, how important it is to have at least some if not more of your assets in a form in which you possess. It may be something other than PMs as long as there is no counter-party risk in owning the asset (meaning you don't have to depend on some person or entity down the road to deliver said asset to you).

As more bad financial events happen over the next few years (I believe there will be many more all over the world), eventually the sheeple will figure out that institutions that might have been safe over the last 50 years or so have changed and the need for direct asset ownership whether it be PMs, artwork or cash in the mattress is now essential.

Remember when everyone was so concerned about gold or silver confiscation?

Just my opinion.

Jim

And this is different from the past because....? SNL scandal in the '80s. Countless stock market crashes. The great depression. And on and on. It has always been the case that you want to be diversified and not hold all of your assets in something that can lose value instantly. Nothing new about the way things are going today that changes this.

 

[TreasurePirate69]

I saw an interesting report about the fact that the US govt's continual pumping of dollars into the banking system to keep the interest rates at artificially, and ridiculously low levels is what is causing the stock market to soar despite current economic conditions. Nobody buys bonds when interest is low. When the gov't eventually stops propping up wallstreet, it's going to crash, and hard. When that happens, the PM market will skyrocket.

The current confiscation of cash from bank accounts in Cypress is being discussed as a viable solution in other European countries. This WILL cause at least a European bank failure, and likely a worldwide one. What happens to any markets when the banks crash is a mystery. Guns, ammo, PM and alcohol are always smart "investments".

Confiscation of cash from bank accounts? This has been going on for many years and was called "depositors over the insured limit losing their deposits due to a bank declaring bankruptcy". When a bank declares bankruptcy somebody is going to have to lose money. I guess today it is called "confiscation". It used to be called selling assets to pay collectors.

I guess fear sells and people don't bother doing their homework anymore. Go figure. It never ceases to amaze me that people will believe anything they hear from their favorite PM evangelist or blogger. And here I thought we had already covered this (to death) in the other thread.

 

[jim4silver]

And this is different from the past because....? SNL scandal in the '80s. Countless stock market crashes. The great depression. And on and on. It has always been the case that you want to be diversified and not hold all of your assets in something that can lose value instantly. Nothing new about the way things are going today that changes this.

How is it different now.... let's start with

1. the fact that we are now almost $17 TRILLION in debt and will have yearly budget deficits of at least $1 TRILLION per year and probably more for the foreseeable future. Did we ever have this before at this level? No.

2. Conservative figures put the outstanding worldwide derivatives balance at around $700 TRILLION. Others say the value is $1.2 Quadrillion ($1,200 TRILLION) if valued properly. Either way, we'll say at least $700 TRILLION. Most of this is nonsecured from what I have read. The exposure of our top ten banks in the US to derivatives is huge. Has there ever in history been that big of a financial house of cards waiting to collapse? No. And if/when there is a collapse, who is gonna wind up paying? Ask some over in Cyprus.

3. The problems of excessive and historically high debt are wide spread throughout the world and unemployment levels are high in many countries around the world without relief in sight. Personal savings are at low rates in the US and many have excessive personal debt.

Here is an illustration of derivatives exposure:

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

So I guess I have to say in my opinion things are different now as far as how bad things can or will get with respect to financial situations throughout the world. I hope my opinions turn out to be wrong.

Jim

 

[Jason in Enid]

Confiscation of cash from bank accounts? This has been going on for many years and was called "depositors over the insured limit losing their deposits due to a bank declaring bankruptcy". When a bank declares bankruptcy somebody is going to have to lose money. I guess today it is called "confiscation". It used to be called selling assets to pay collectors.

I guess fear sells and people don't bother doing their homework anymore. Go figure. It never ceases to amaze me that people will believe anything they hear from their favorite PM evangelist or blogger. And here I thought we had already covered this (to death) in the other thread.

This isn't about banks failing. this is the government saying "all banks will close until further notice and no withdrawals or transfers are allowed until we go in and take what we want". What does it matter if the account holder has $1000 or $100,000? Confiscating money if theft either way. I guess you feel those rich people deserve to lose what they earned.

In case you missed it, this is EXACTLY what Cypress did. They also made it illegal to transfer more than a few thousand dollars out of the country, there are limits on what anyone can withdraw from the banks, and even limits on what they purchase with credit cards. But I guess you just ignored all this. It was only covered by every national news network.

 

[TreasurePirate69]

This isn't about banks failing. this is the government saying "all banks will close until further notice and no withdrawals or transfers are allowed until we go in and take what we want". What does it matter if the account holder has $1000 or $100,000? Confiscating money if theft either way. I guess you feel those rich people deserve to lose what they earned.

Perhaps you should go read the Cyprus thread and get back to me. I covered all of this already. And you do realize that in Cyprus if the account holder had $1000 or even $100,000 they didn't lose a dime. You do realize that right because that is critical and is exactly the way it works here in the US. As for the government saying all banks are closed, that has happened many times too. Many, many times all over the world. It is common practice when the bank is transferred into receivorship which is very different from "the bank is closed until we go in and take what we want". Cyprus didn't do that at all. They didn't "take what they want". They took the funds necessary to pay off creditors. Again, go read the Cyprus thread before you accept the recent Cyprus propaganda as fact.

 

[TreasurePirate69]

How is it different now.... let's start with

1. the fact that we are now almost $17 TRILLION in debt and will have yearly budget deficits of at least $1 TRILLION per year and probably more for the foreseeable future. Did we ever have this before at this level? No.

2. Conservative figures put the outstanding worldwide derivatives balance at around $700 TRILLION. Others say the value is $1.2 Quadrillion ($1,200 TRILLION) if valued properly. Either way, we'll say at least $700 TRILLION. Most of this is nonsecured from what I have read. The exposure of our top ten banks in the US to derivatives is huge. Has there ever in history been that big of a financial house of cards waiting to collapse? No. And if/when there is a collapse, who is gonna wind up paying? Ask some over in Cyprus.

3. The problems of excessive and historically high debt are wide spread throughout the world and unemployment levels are high in many countries around the world without relief in sight. Personal savings are at low rates in the US and many have excessive personal debt.

Here is an illustration of derivatives exposure:

Derivatives - The Unregulated Global Casino for Banks

So I guess I have to say in my opinion things are different now as far as how bad things can or will get with respect to financial situations throughout the world. I hope my opinions turn out to be wrong.

Jim

Well, I guess you've got me there. I can't argue with any of that. Still, I stick by my statement that it has always been a wise decision to be well diversified rather than putting all of your money in one place. Perhaps the current events just make that even more important or obvious.

 

[jim4silver]

From what I had read, it was really only two banks that were affected with respect to having money confiscated. They closed one but the other remains open as before. So it is not like a small town bank that goes bankrupt and closes, etc.

TreasurePirate is right though in the sense that what happens is legal. Unfortunately when you deposit money in a bank it becomes the bank's property and you become an unsecured creditor to the bank. I actually never thought about it that way until this Cyprus deal happened.

Jim

 

[jeff of pa]

I think the point of the original article is People are scared,.
Rightly so or not.
Many are looking for alternatives to banks

 

[mjlalt]

People are starting to go back to keeping money under their mattress.
the mattress safe

 

[Marchas45]

That safe is too small for me. Lol

 

[50cent]

Yeah right....the only clad thats still gonna be traded for cash those days will be the Ike. putting your money in clad is gonna make you sad.