In today’s present world of zero interest rate policies (ZIRP), ‘savers’ are penalized (not rewarded) for saving their money (in the traditional sense of earning some interest in a bank).
Additionally, and for those who have been paying attention, the reason that we are seeing zero interest rates is directly related to the underlying problems which nearly caused the end of the financial world as we knew it (back in 2008) and they have NOT been fixed. In fact, they are worse than ever before…
Other than those who have been fooled by the propagandized perception that everything’s ‘peachy’ today, the reality is that since the crash of 2008 (which wasn’t allowed to ‘really’ crash) we have been living on borrowed time.
The ‘solutions’ to date have simply been buying time.
Twisting the numbers, redefining the measuring sticks, funding (QE, etc..) with borrowed money, smoke and mirrors, artificially inflating the markets, suppressing truths, propagandizing untruths, devising distractions and shifting perceptions – it’s all temporary.
It’s not a strategy that will fix anything, it’s a strategy to prolong the inevitable. The inevitable being that someone always pays – eventually, one way or another.
Given the apparent and building systemic risks within today’s twisted financial system, and given the apparent fact that TBTF banks will now ‘bail-in’ (keep) your money in a banking collapse, and given that you’re not getting any real interest in today’s banking system, and given that the FDIC has nowhere near enough insurance money to bail out a TBTF bank, perhaps it’s time for becoming your own banker…
During the next banking crisis, any ‘money’ that you and I have in the bank will be ‘bailed-in’ after a financial collapse.
During the recent G20 meeting (mid-November), the member nations decided that your bank deposits will become property of the bank if a crisis takes it down.
Here are some thoughts on the notion of becoming your own banker – or at least making better decisions about your choices regarding banking in general:
The Federal Reserve and their governmental and global counterparts have been miraculously holding the financial system (house of cards) together. The past six years have been filled with an incredible array of financial props (and propaganda) while the fundamentals have been twisted and reshaped to support a perception of goodness. They KNOW that to a great extent, their success depends on your perception of goodness so that you don’t look under the rug, so to speak, and become horrified at the reality.
As each year ticks by, and predictions of economic and financial collapse go by the way side, one begins to wonder how many more rabbits can they pull out of that hat. We just don’t know. One thing we do know however is that they MUST keep interest rates VERY LOW (can you say ‘rigged’ LIBOR?) because the interest payment on our debt alone could bankrupt us very quickly (not that we’re not ALREADY bankrupt – an empty shell).
By the way, LIBOR is a benchmark rate that the world’s leading banks charge each other for short-term loans, and is set each day in London. It is the first step to calculating interest rates on various loans throughout the world – including yours. If it goes up, your payments go up, and given that so many are living on the edge – it will result in more defaults and a worsening economy.
So we KNOW that they MUST keep interest rates at or near zero for the foreseeable future. So why keep money in the bank? One thought is to only ‘use’ the bank for the convenience of processing your ‘churn’ of bills. If you’re using direct deposit for your paycheck (like most people today), you can utilize online electronic bill pay which most banks have available today. Convenience. You might keep a certain amount of reserve in the bank, but perhaps not too much. That’s about it.
You might draw off some excess (if you’re fortunate enough to have excess) and build a supply of cash at home. The money you’re losing by doing that (through the currency devaluation of ‘real’ inflation) is no different than the near zero interest return you will get in most banks today (or fractions of a percent). The risk at home is fire and theft. But a decent well hidden and secured fire-resistant safe can mitigate that risk for the most part.
Again, if you’re fortunate enough to have excess beyond that of building a cash nest egg at home, you might further diversify into some precious metals. Silver and gold. Keep it at home in your safe (or a second safe so as not to have all eggs in one basket). Physical possession is EVERYTHING in a collapse.
Maybe you put some of your extra money into tangibles that will help you achieve more of a self-reliant life. Things that will help you sustain your household during a time of hardship (for example). Think of your necessities in life and then come up with methods to augment your consumption in a more self sustaining way. Crops. Gardening. Alternative Energy. Investing into your own household.
Today’s credit unions are generally separated from some of the risks within the traditional banking system. Using a credit union is probably a good choice for many people. Have a look at their balance sheets to get an idea of their health (loans versus cash on hand, etc..).
Using a smaller local ‘traditional’ bank may be a better idea than a large (empty shell) TBTF bank. There are resources online to discover the general ratings and health of banks (but they probably won’t show you everything, like their exposure to derivatives, etc..).
Some people might decide not to use a bank at all. This becomes much more difficult though while trying to function in today’s world, however it is possible. Maybe you set up a bank account with minimums so that you can cash your checks.
On another note, transacting with CASH is a great way to reduce your expenses. The reason for this is because handing over cash (for whatever) ‘feels’ more like money than handing over a debit card for immediate withdrawal from your checking account (for example). Because of this real phenomenon, you will subconsciously spend less.
The banking cartel today is getting multiple benefits from zero interest rate policies. Although the Federal Reserve is a PRIVATE ENTITY, their government cohorts are able to pay less on their enormous borrowed debt. Additionally, since savers get nothing in return for their deposits (some places even have NEGATIVE interest rates), people are more encouraged to put their money into risky vehicles such as the stock market (similar with their 401k’s) which in turn helps to keep the system pumped up. Zero interest rate policies are also largely enabling many companies to buy back their own stocks, which in turn pumps up the market (rather than based on real company fundamentals). There’s more, but I’ll leave it at that.
What are some of your ideas around the notion of becoming your own banker?