WARNING
Bank Deposits Will Soon No Longer Be Considered Money but Paper Investments by Kenneth Schortgen Jr,
Thursday, November 13, 2014
This weekend the G20 nations will
convene in Brisbane, Australia to conclude a week of Asian festivities that
began in Beijing for the developed countries and major economies. And on
Sunday, the biggest deal of the week will be made as the G20 will formally
announce new banking rules that are expected to send shock waves to anyone
holding a checking, savings, or money market account in a financial
institution.
On Nov. 16, the G20 will implement a new policy that makes bank deposits on par with paper investments, subjecting account holders to declines that one might experience from holding a stock or other security when the next financial banking crisis occurs. Additionally, all member nations of the G20 will immediately submit and pass legislation that will fulfill this program, creating a new paradigm where banks no longer recognize your deposits as money, but as liabilities and securitized capital owned and controlled by the bank or institution.
In essence, the Cyprus template of 2011 will be fully implemented in every major economy, and place bank depositors as the primary instrument of the next bailouts when the next crisis occurs...
For most Americans with savings or checking accounts in federally insured banks, normal FDIC rules on deposit insurance are still in play, but anyone with over $250,000 in any one account, or held offshore, will have their money automatically subject to bankruptcy disbursements from the courts based on a much lower rank of priority, and a much lower percentage of return.
This also includes business accounts, money market accounts, and any depository investments such as a certificate of deposit (CD)...
after Sunday at the G20 meeting, the risks of holding any cash in a bank or financial institution will have to be weighed as heavily and with as much determination of risk as if you were holding a stock or municipal bond, which could decline in an instant should the financial environment bring a crisis even remotely similar to that of 2008.
On Nov. 16, the G20 will implement a new policy that makes bank deposits on par with paper investments, subjecting account holders to declines that one might experience from holding a stock or other security when the next financial banking crisis occurs. Additionally, all member nations of the G20 will immediately submit and pass legislation that will fulfill this program, creating a new paradigm where banks no longer recognize your deposits as money, but as liabilities and securitized capital owned and controlled by the bank or institution.
In essence, the Cyprus template of 2011 will be fully implemented in every major economy, and place bank depositors as the primary instrument of the next bailouts when the next crisis occurs...
For most Americans with savings or checking accounts in federally insured banks, normal FDIC rules on deposit insurance are still in play, but anyone with over $250,000 in any one account, or held offshore, will have their money automatically subject to bankruptcy disbursements from the courts based on a much lower rank of priority, and a much lower percentage of return.
This also includes business accounts, money market accounts, and any depository investments such as a certificate of deposit (CD)...
after Sunday at the G20 meeting, the risks of holding any cash in a bank or financial institution will have to be weighed as heavily and with as much determination of risk as if you were holding a stock or municipal bond, which could decline in an instant should the financial environment bring a crisis even remotely similar to that of 2008.
From a technical perspective, this
is moving in line with Murray Rothbard's perspective on "bank deposit insurance," which he saw as a
scam:
Fractional reserve banking proved
shaky, and so the New Deal, in 1933, added the lie of "bank deposit
insurance," using the benign word "insurance" to mask an arrant
hoax. When the savings and loan system went down the tubes in the late 1980s,
the "deposit insurance" of the federal FSLIC [Federal Savings and
Loan Insurance Corporation] was unmasked as sheer fraud. The
"insurance" was simply the smoke-and-mirrors term for the unbacked
name of the federal government. The poor taxpayers finally bailed out the
S&Ls, but now we are left with the formerly sainted FDIC [Federal Deposit
Insurance Corporation], for commercial banks, which is now increasingly seen to
be shaky, since the FDIC itself has less than one percent of the huge number of
deposits it "insures."
The very idea of "deposit
insurance" is a swindle; how does one insure an institution (fractional
reserve banking) that is inherently insolvent, and which will fall apart whenever
the public finally understands the swindle? Suppose that, tomorrow, the
American public suddenly became aware of the banking swindle, and went to the
banks tomorrow morning, and, in unison, demanded cash. What would happen? The
banks would be instantly insolvent, since they could only muster 10 percent of
the cash they owe their befuddled customers. Neither would the enormous tax
increase needed to bail everyone out be at all palatable. No: the only thing
the Fed could do, and this would be in their power, would be to print enough
money to pay off all the bank depositors. Unfortunately, in the present state
of the banking system, the result would be an immediate plunge into the horrors
of hyperinflation.
Thus, the removal of protection for large depositors is eliminating the scam at this tier. It is, in other words, cutting down on moral hazard.
However, I do not suspect that the world's governments have suddenly found Jesus/Rothbard. I suspect what is going on here is that the government is fully aware that this change will create a separation between bank deposits and government securities. Government securities, especially short-term paper, will become a safer investment than large banks deposits. This will drive funds away from banks and private sector lending and push funds into the direction of government sponsored debt (where there will be continued back up for such debt of the money printing presses).
HT to William Bergman who emails:
About 15 years ago I got the "Best Manuscript"
award at an academic accounting conference for a paper titled "Accounting
for Money." I made the argument that fair value accounting
principles were being introduced inconsistently, in that cash and cash
equivalents were
Comments
All governments have been spending like
drunken sailors for decades and continue to look for revenue increases. The problem is that they are causing their
free markets to shrink, if they have them.
The free market is their only source of revenue, so they need citizens
to “invest” in government.
In the US they want us to buy Treasury Bonds,
so they can keep spending. Nobody is
buying these Treasury Bonds. The first move was to make bank accounts lower the
interest rates they paid close to zero.
Now they are saying that your bank balance might become a rollercoaster.
Norb Leahy, Dunwoody GA Tea Party Leader
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