Would You Keep Your Money in a Bank Knowing This?

Saturday, February 21, 2015
By Paul Martin

by C Serpa

Keeping your money in a bank is a high-risk situation.

Would you give your money to a hedge fund that is 9x leveraged? For every $100 you deposit in the bank $90 is subsequently loaned on.

Could zero/negative interest rates be the end of the fractional banking system and force deposit holders into gold and silver?

US Federal Reserve sets a Required Reserve Ratio of 10%, but applies this only to deposits by individuals! Banks have no reserve requirement at all for deposits by companies!

The Required Reserve Ratio of 10% means that only a fraction or $10 of the $100 you have deposited at the bank is available for cash withdrawals.

You have to ask yourself when interest rates are so low and don’t compensate you for inflation and with the risk that there
could be bail-ins, considering the incredible
derivative positions banks have, why keep your money at the bank?
At the most the bank is likely to have only 10% of your money in cash
The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15% of insured deposits.

Your $90 that is loaned on is leveraged within the banking system to increase profits for the bank. A bank is basically a big 9x leveraged hedge fund. Excessive leverage by the banks was one of the main causes of the Great Depression and of the 2008 financial crisis. Under normal circumstance and normal debt levels the fractional banking system works, though these are not ordinary times!

All Governments have silently built in the “bail in” template for when the roof comes down. Where is the accountability of the politicians and bankers?

The Rest…HERE

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