After reading Simon Black’s Sovereign Man today, it’s easy to realize that what happened in Cyprus could happen in the United States as well. Over night bank accounts were frozen and people could not even cash a check or move money from one bank account to another.
Imagine going to bed at night with the belief that all is well in your world and then waking up in the morning to a brand new reality: your government AND banking system are flat broke.
Imagine not having access to your own funds. Cash withdrawal limits are imposed. Funds transfers are curtailed and you are even forbidden from doing something as simple as cashing a check.
What would that mean to you? What would you do if your bank account(s) were frozen and you had no access to your money? How would you pay your rent and other bills? How would you buy the food you need to cook for dinner tonight? How would you put gas in your car for going to work if you could not use your credit or debit card?
What kind of chaos would you expect to see in your neighborhood and city?
“Imagine that your country and banking system are so broke that you have to receive approval from a special committee just to send your own money to your own kids who are away at university…”
Imagine the “government FROZE bank accounts across the country. Suddenly an entire nation had no access to their savings.”
Imagine “wealthy people would have their funds seized. But this wasn’t a victory for everyone else… because simultaneously the government announced a flurry of severe financial restrictions.”
Imagine that a year later, the government still believes there is a “lack of substantial liquidity and risk of deposits outflow. . . that could lead to instability of the financial system and have destabilizing consequences on the economy and society of the country as a whole.”
Imagine the government has to impose “restrictive measures” in order to safeguard “public order and public security”. In other words, capital controls are for your own good.
Simon Black says:
“This is exactly the sort of thing that happens when governments and banking systems go bankrupt. And every shred of objective evidence suggests that many of the ‘rich’ nations of the West are in a similar position.”
Then there’s the FDIC, which is supposed to insure deposits in the Land of the Free. But the FDIC itself is inadequately capitalized, failing to meet the legal minimum for its insurance fund.
All of this is backed up by the US government, whose net worth is negative $17 trillion.
The Federal Reserve is supposed to be able to bail out the banks. But at this point, with $50+ billion in unrealized losses and a net equity of just 1.35% of its record $4+ trillion in assets, the Fed itself is practically insolvent.
This is the reality: inadequately capitalized banks are backed by an inadequately capitalized insurance fund backed by an insolvent government and nearly insolvent central bank.
Hardly a beacon of stability. Yet this is the system in which literally hundreds of millions of people have misplaced their trust and confidence.
It doesn’t take a financial guru to figure out that this is not a consequence-free environment.
All that’s required is the independence of mind to look at the facts rationally and understand that, like Cyprus, this could all change over night.
It’s worth considering that at least a portion of your savings may be much safer elsewhere– in a stronger, well-capitalized foreign bank located in a stable country with minimal debt.
It may be wise to consider those options while you still have the ability to do so.
Keep in mind that some of the largest banks in the United States have failed their stress tests; this means they are inadequately capitalized to withstand any major financial shock (see the list below of articles relating to this subject).
Unfortunately, people like those on Wall Street believe this scenario cannot happen in America. They say safeguards are in place to prevent a Cyprus type of situation from happening in the United States. These are also the same people who say the dollar WILL NEVER collapse because changes were made after the Great Depression that prevents it. Excuse me, but NEVER say never!!
Our American Way of Life is about to come to a screeching halt; the hand-writing is on the wall! It does not take much to see the future if one is paying attention!
www.usatoday.com/story/money/…stress–tests/6922129/ USA Today
Mar 27, 2014 – The Federal Reserve rejected the plans of Citigroup and four other banksto raise dividend payments and increase stock buybacks.
Mar 26, 2014 – The Fed said those banks would also have failed this week’s stress testhad they not resubmitted their plans. In both of those cases, the banks …
www.thedeal.com/content/…/five-banks–fail-fed-stress–test.php The Deal
Mar 27, 2014 – Five banks failed final Federal Reserve stress tests put in place after the 2008 financial crisis made it imperative that financial institutions hold …
www.bloomberg.com/…/citigroup-fails-fed-stress–test-as-… Bloomberg L.P.
Mar 27, 2014 – Citigroup, Four Other Banks Fail Fed Stress Test · FBR’s Miller on Fed Stress … Banks in this year’s test collectively received approval to pay out …
dealbook.nytimes.com/…/failing–stress–test-is-anoth… The New York Times
Mar 27, 2014 – The banking behemoth could show that it had enough capital to ride out … A day after Citigroup’s capital plan failed the Fed’s stress test for the …
dealbook.nytimes.com/…/fed-rebuffs-citigroup-on-… The New York Times
Mar 26, 2014 – Citigroup was the only one of the nation’s largest banks that failed to persuade … News of the stress test results set off a panic within Citigroup, …
www.cnbc.com/id/101510982 CNBCMar 20, 2014
The Federal Reserve’s most recent stress test shows 29 out of 30 … Only one smaller bank, Zions Bancorporation, failed to pass the annual test.
Mar 28, 2014 – Five United States bank holding companies failed stress testing this year by … “
These banks have had a long time to prepare for it, especially …