Economic Red Lights Are Flashing
Guest article by “So Cal Gal”
Although it received minimal media coverage, something potentially important happened on July 31st. Rating agency Fitch downgraded the economic outlook for the USA from “Stable” to “Negative”.
Although Fitch did not reduce our sovereign debt rating from our current AAA status (yet) there was language in Fitch’s report that paves the way for more bad news to come.
( How might this affect you? I’ll talk about that at the end. )
Before we get to that, here’s some comments from Fitch on their downgrade of our “Outlook”:
Fitch’s Comments on Downgraded Economic Outlook for USA
(bold emphasis is mine):
“… the Outlook has been revised to Negative to reflect the ongoing deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan…”
“High fiscal deficits and debt were already on a rising medium-term path even before the onset of the huge economic shock precipitated by the coronavirus. They have started to erode the traditional credit strengths of the U.S….”
“…there is a growing risk that U.S. policymakers will not consolidate public finances sufficiently to stabilize public debt after the pandemic shock has passed.”
“The U.S. had the highest government debt of any “AAA”-rated sovereign heading into the crisis, and Fitch expects general debt to exceed 130% of GDP by 2021.”
There’s a pattern: “deterioration”, “erode”, “growing risk”, “not sufficient to stabilize”, “highest debt”
We have the highest debt of ANY country in the world that still carries Fitch’s AAA rating
AND our debt is expected to exceed 130% of GDP next year – after the worst effects of the pandemic shut-downs and borrowing for fiscal stimulus is supposed to have passed. WOW.
Fitch goes on to review a lot of data including a lot of what-ifs, potential rebounds, and risks. But without getting into all that detail, in summary, Fitch lists factors that could lead to us being downgraded from AAA:
…policies that could lead to “A decline in the coherence and credibility of US policy-making that undermines the reserve currency status of the US dollar and government’s financing flexibility”. Sounds like what’s happening right now, doesn’t it?
Flashing Red Lights: How This Might Affect Us
I am not a financial advisor – and I am NOT giving specific financial advice to anyone.
However I am sharing the Fitch report because most media outlets glossed over it. It warns of a potential downgrade to our sovereign debt. This could set a series of events in motion that would not be good for most of us.
Let’s say Fitch finally stops “adjusting” our rating and downgrades our debt… then what?
Moody’s would almost have to follow suit to maintain their own credibility. Unlike when only S&P downgraded us, markets would likely take a downgrade from all 3 agencies seriously.
We would expect to see the interest rate we pay on our debt go up (JP Morgan estimates a downgrade would cost an additional $100 billion a year in interest).
State and local governments typically can’t carry a higher rating than their country’s sovereign debt, so their borrowing costs would rise. Ditto corporations. Costs would be passed along to all of us taxpayers and consumers.
From there, we would expect the cost of individual and small business loans, credit cards, etc… to rise. In the past, such activity leads to a decline in consumer confidence and a pull-back in consumer and small business spending… and spending is the biggest driver of our economy.
Lack of spending leads to more business closures, more job losses.
Politicians will look for more ways to stimulate the economy through even more government programs and spending. It’s a vicious cycle that is hard to break.
Mix in the turmoil and uncertainty of coronavirus, civil unrest and election season and we can all imagine the results.
As people who prepare,
We’re always on the lookout for signs or signals of danger brewing.
We try to envision possible scenarios and act ahead of the masses…
I see this Fitch report as one of those signs… the red lights are flashing.
Get Your Financial House In Order
For those still getting your financial houses in order, I suggest you hasten your plans to completion.
Pay down, pay off or consolidate as much debt as possible.
Review your investments (including retirement accounts) to be sure they make sense in this environment.
If nothing else, I hope this info encourages you to keep a close eye on not just daily stock market activity (which is highly volatile as we all know).
Keep watch on national and international financial news and other investments (how about those rising PM prices?).
We cannot control these markets and events, but we can control how well prepared we are to cope with the further potential bad news Fitch’s reports warns may be coming.
by “So Cal Gal”
[ Read: Valued Preparations & Preparedness BEFORE The Crisis Hits ]
The average life cycle of fiat money in history is 40 years. Our money has been funny since 1974? It is backed by lead used by our military. What could go wrong?
Feral,
Thanks for commenting… and you’re right… take the currency off the gold standard, and then print as much as you want… what could go wrong?
I had the strangest thought?? Why don’t we ever see new one dollar bills??
I can’t ever remember having two stick together like 20s.
When any financial declaration that Fitch or Moody’s could make is of concern to the well being of your financial household then that should be the first red light that your house is not in financial order. You are then at risk somewhere in your budget. No form of paper is secure money, neither green backs, stocks, bonds or anything from the printing press.
This is my first writing after many years of just reading.
Welcome back MSB Troll
MSB Troll,
Thanks for commenting, glad you jumped in! I agree, all paper is subject to risk – some more than others.
The problem is – where does a person put their retirement funds? Every market is subject to manipulation… so many of us end up just trying to find somewhere to put savings that won’t fall apart on us. There are no great answers – I think everyone has to just make the best decisions they can based on as much info as they can get. Thoughts?
I think I am going to invest my retirement in Zimbabwe dollars. That way I can retire a trillionaire. The fact that I can only buy a loaf of bread with that money is besides the point. I would be a trillionaire!! Wooohooo
INPrepper
Reason I mentioned we ALL would be needing a wheel borrow to haul around that worthless paper for a loaf of bread.
Sad that many do not know the true coin of this nation. Which I saw mentioned: Gold coins and silver coins. Not the funny green backs that the
bank heisters aka fed no reserve pushed on everyone.
unfortunately while both gold and silver have been on a run they are getting hammered today. Silver down 3.75 and ounce and gold down over 100.00 . Not saying I don’t have any but I’m never sure they are a safe investment either
poorman
If PM’s go beyond a certain price point TPTB start dumping in green back, it appears that they either are selling them for paper $$ into their pockets or other foreign currencies which are back by a mineral source.
Chinese now have the Yuan backed by gold which they have been scarfing up in small amounts since America went off the gold standard.
It is a power struggle.
We are caught up in the middle of a contentious chess game, where we are the pawns. mho
AC
China has been more than scarfing up small amounts of gold. China for the last several years has been the worlds number one producer of gold. Plus they are amongst the worlds largest importers of gold as well. There is and has been a lot of the worlds gold headed to China. That is not including the large amounts China has bought through back channels and through shell companies. Once every several years, the Chicoms will release an ‘official’ gov holding on gold but like all things here you can trust it as far as you can throw it (which is not very far).
MSB Troll, I don’t agree with your first sentence. Many have their “house in financial order”, and it could involve stocks, or bonds or savings..depending upon the risk that person is willing to take. You would still monitor signs/trends for any necessary shifting of resources that is needed. Our personal philosophy is don’t put All your eggs in one basket.
That being said, it is always nice to hear from long time readers. 👍
Diversification
The GDP is driven by consumer spending(approximately 70%) and many
people can’t spend for anything other than bare necessities.
Debt will exceed the GDP by 120%.I think the economy is FUBAR.
Hi Vickie,
Thanks for commenting – and you bring up one of the big weaknesses we have. The economy goes gangbusters when consumer confidence is high, and unemployment is low.
But, you hinder consumer spending through lock-downs, businesses closures and high unemployment, and consumer spending takes a major hit. Fitch is predicting debt-to-GDP will hit 130% in 2021 – just a few short months away. FUBAR is right!
The US debt has been a ticking time bomb for a long time. It’s now at the point where there is no way it could be paid off doing things the way we do today. So when the debt goes up another trillion (that’s a trillion with a T) or two, it’s like putting an extra bullet into a dead lame horse as it doesn’t really change things. The damage has already been done.
What we could do is what AOC suggested and mint some trillion dollar coins. The 1ounce gold eagle with a value of $1 Trillion. We could mint 20 or 30 coins and use that to pay off the debt. Heck, while we’re at it, mint one or two hundred coins. We could live like it’s 1999. All this debt is with fiat currency anyways. We might as well put some arbitrary number on a gold coin that really doesn’t mean crap. I’m sure Japan who has about a trillion of US debt would be ecstatic if we gave them a one ounce gold coin that said $1 Trillion and the US said ‘here, we’re even’.
The only way I see out of the debt mess is through a default because there is no way the Dems and Repubs are going to curtail little alone cut spending.
Was she the one who said that when there aren’t enough digits on the debt clock it ticks back over to 0? So the true solution is to spend as much as we can until it resets!
So Lauren, are you implying that isn’t a fiscally responsible strategy after all?? Gee…it had sounded like such a wise course of action. Oh well. 🙁
Great article, So Cal Gal!
M’Lynn,
Hahaha! And it sounded so reasonable (sarc – and eye roll).
Thanks for commenting! I know we all know the economy is in big trouble, but when a report like Fitch’s comes out it is worth walking through it – sadly, it confirms what we all believe is happening.
So Cal Gal….weren’t there two others who Fitch also included? Was it Japan and France?
I’ve said all along that the debt is a joke..and congress, etc. knows it’s never gonna be paid.
And JayJay,
Were not even talking about the unfounded liabilities. I think I saw somewhere a while back that it was over $200 Trillion.
I read that too. And this is worldwide and will hit every citizen of every country.
If folks aren’t storing things now, they must be living under a rock.
Lauren,
It must be something like I heard Rush say several years ago that the Dems think we can spend our way into prosperity. The Repubs are guilty too. I am not an expert on world history which means I could be wrong but I never heard of a country spend its way into prosperity and maintain its world status. Rome, Greece, Britain, France, Spain, Italy, Portugal, Egypt, and on and on. They are all visions of their former selves and just a shell of what they used to be.
It was a few years ago, maybe 2016–I was listening to some debate or other, so probably not AOC (A debate between AOC and a turnip would end up with her in tears and demanding a safe space). The woman in question was completely serious, which made me wonder both how she got where she was and what her schooling must have been like.
It does sound like something AOC would say, though. I don’t think it was the same person (Green Party) who said that her plans would be paid for by quantitative easing and negative interest rates, but it could have been.
So Cal Gal, to give another chilling example, my son worked as a legislative aide in D. C. He sent me a photo that showed a whole wall and door covered with messages on sticky notes. They were for AOC from her adoring fans. She has become an icon through Twitter and as ludicrous as she is in her thinking and speech, a real embarrassing twit, her generation loves her. Along with so many other things, this doesn’t bode well for the future of our country. Another reminder that this world is not our home.
AOC reminds me of a three year old trying to explain how airplanes fly. It’s part magic and another part of something that is pulled out of the air that has no basis on reality in any way but yet the child talks like they know exactly how it is with certainty.
INPrepper,
I agree that all this debt is never going to be repaid. Even now, as our older t-bills come due, we just reissue fresh debt – so a debt is technically retired, but we are not paying down a thing.
And I also agree that NO ONE seems to have any fiscal discipline… just keep on spending.
In the Fitch report, they mention that they were already taking into account another $1 trillion in debt added in August to cover the next round of federal covid benefits… but do any of us really think that $1 trillion will be the last of it?
But default? I would think that would lead to a full-on world-wide meltdown… who wants to be the politician who goes down in history as having that happen on their watch?
INPrep,
Suddenly we can make alchemy work,
gold into fiat, grand. HeHEHE
Alchemy, yes
Right now would be the time to change gold into lead.
I believe Thomas Jefferson said he feared centralized banks more than standing armies. I also agree with what old hickory had to say about centralized very fractional reserve banks.
Well, I read an article about requirements for loans…any Loan? I don’t know. But the reason Gene and I were declined a Heloc from BofA was his credit score was not 700, but mine is 830–go figure. All banks have adopted this new rule I read online.
Terminix called and is coming to see the ‘un’connected sump pump, the pump that goes nowhere!!, the residential humidifier that cost ‘thousands’ of dollars that looks like a walmart type, the field line laying around connected to nothing (only about 20 feet), the trenches that aren’t there, the portions of concrete blocks not insulated, the blocked vents—yes, they styrofoamed the vents–and said they’d get the contract back to 7% as contract states…
AND I SAID, WHY??? I OWE YOU NOTHING!!! I SIGNED NOTHING!!!
Next?? WKBO news station in Bowling Green is to be contacted.
Will I?? Oh, heck yeah.
Seriously, I am of a mind to not answer the phone for 2 weeks and see how they feel when that happens.
Oh, BBB alerted them about my complaint–oh, last night, I filed a complaint with Kentucky Attorney General.
It ain’t over till the contract is destroyed, the vents are unsealed!!
You GO, JayJay. Good luck. We are pulling for you!
Get the serial numbers from the sump pump and the residential humidifier, find out how much they cost. Might give you some more leverage.
Thanks–I am so naive to this new game..Good/great idea!!
There is no need for leverage–destroy the contract illegally placed in my name–remove crap on vents. Goodbye crooks.
Serial #s….okay.
Thanks everyone…Gene’s on his way to crawl under and photograph and get all info he can..you’re great. So many minds is so better than one.
Don’t make a Kentuckian mad.
Even worse–I’m Tennessee redneck country girl!!
Jay Jay,
Thanks for commenting and Good luck!!!
And yes, there are lots of stories out now that lenders are tightening their qualifying criteria like crazy. For people who are still trying to get a loan refinanced, or buy their first home, or consolidate debt it is becoming increasingly difficult – many banks are flat out turning people down now.
Everyone who is still trying to get their finances sorted out needs to step on it… it really feels like time grows short.
Thank you to Ken for editing down and making my article more digestible!
One of the big things that stands out (and is buried deep in the details in Fitch’s report) is that Fitch admits that the US actually gets a “AA” rating by their own proprietary software… not the “AAA” rating they are still giving us. They come right out and say that a committee at Fitch “adjusted” our rating to hold the AAA based on our being the world’ predominant currency, and having no end to how much currency we can print.
So, we really are a “AA” rated sovereign debt, Fitch just hasn’t come out and done the actual downgrade (yet).
It was pretty sobering to read the report all the way through. I saw no good news.
This is a HUGE detail in an already great article So Cal Gal. Thank you!
Serenabit,
Thanks for your comments, and I was floored when I read the part about “adjusting” our rating to keep it at AAA. To me, that should have been a screaming headline on every financial news show and website.
I sent Ken an article that was too long, with too much detail, so I wanted to add this piece of info into the conversation.
Glad you liked the article, thanks!!!
So Cal
Adjusting is nothing new. Just look at how they have fiddled with the unemployment numbers for the last several decades. It’s now to the point where almost half the population will be out of work but yet we will have historical low unemployment rates. A perfect example: if you are out if work and eventually give up looking for a job, you will not be counted amongst the unemployed. And when 30 million people give up looking for a job, they will not be counted as unemployed either. Meanwhile, the unemployment numbers will look better than ever.
It’s simple, when they don’t like the numbers, they just fudge the math a little more to fit their agenda.
I wonder how long that AAA will last, given that several of the big players in the world economy are trying so hard to make another currency predominant.
Chipmunk,
Yep!
We are the ones in a LOT of crosshairs right now. How many nations, or world leaders, would rejoice in seeing our debt downgraded and everything that goes along with that?
Unless something changes, I see Fitch finally giving us the downgrade. Especially since they are only taking another $1 trillion in stimulus debt being added. I just don’t see it stopping there – then Fitch can use that extra debt as the reason for the downgrade. And they can point to this report and say they warned us our debt was already too high.
Doesn’t it feel like events are already set in motion?
Fictional money only represents fictional wealth. Money is now just a “blip” in a computer, buy which the Looters acquire the purchasing power to obtain actual wealth in exchange for nothing at all.
I write 1,000,000,000,000 in a computer and, by doing so, acquire the ability to purchase the entire wheat crop of the U.S., if I wish.
It is just too bad if you are not part of the Looter computer network, or if all the actual wealth has departed your possession in exchange for “blips,” which can vanish into oblivion the instant the Looters decide they have what they can get…
Then, I write “0” in the same computer…and reset the entire system…allowing whatever new method of exchange to arise, which people will tolerate enough to stop burning down their cities.
Not to worry. The people will take anything they can get.
Ision,
Thanks for commenting, and boy oh boy the world has sure changed since I was growing up and learning lessons about money (I am dating myself!). IMO, too many younger people are used to debit cards, carrying credit card balances, and don’t have a good sense of the value of money. Not greed as in accumulating it, but lack of respect for saving up to buy something, or understanding how to even balance a checkbook (do kids even have checkbooks any more?)
TPTB want us to be a cashless society and they are pushing hard for it, which to my mind not only removes any last vestiges of our privacy, but completely distorts people’s thinking about money and wealth. But, I don’t think there is any stopping it.
I wonder if hotstilitys will commence when the reserve currency status becomes more challenged. (Hostilities intentionally misspelled)
When all countries are spending themselves into more debt, those debts become relative. But, when one defaults, it may start a cascading collapse around the globe.
We may see a global devaluation of all currencies to bring back some stability, but when have all countries ever cooperated on anything? So, the only ways out for this country to survive economically are default or hyperinflation.
There is a third option that has been used in the past, world war. Great for the economies of those left standing.
hermit us,
Thanks you for your comments and I couldn’t agree more. I can’t picture the industrialized nations all agreeing to currency devaluations – too many opinions and big egos. I can see hyperinflation at some point… but I don’t think any US politician would be willing to allow a default to happen – no one will want to go down in history as part of the leadership team that allowed that to happen.
My DH keeps saying he thinks war is the way it’s going to go – he agrees with your third option. I thought it was going that way for sure if the witch who wears pantsuits had won the election. Now, I think we are on borrowed time.
To me it is amazing that our economy has survived this long. How long does it really take to outspend your own personal economy without feeling the effects? And this country has done it for decades and continues to do so. At some point there is going to be a lot of hurt to us citizens while our politicians contuinue to spend willy-nilly.
I have a very juvenile understanding of the economy and economics. What happens when the US is unable to spend? Will we declare bankruptcy like the Prez did in his business life?
If this country is able to withstand the election, and we withstand the economic detriments, our children and their children, and their children will feel the hurt. And the middle class will be long gone, and there will be the elites and the impoverished.
Pegasus,
I am also surprised we haven’t had the full-blown financial meltdown yet. It’s only because the Fed is propping up our markets that we’ve come this far.
As long as there is a market for our sovereign debt, we will keep borrowing, and printing more currency. Typically, this leads to inflation, and if unchecked, hyperinflation.
Any way you slice it, thus is bad news for all of us.
And your comments, Pegasus, bring me to the question every person on this site feels should be answered and never will be—a fact we are outraged and furious about.
We sacrifice; we are responsible and do without lots of things we would LIKE to have. Our cars are 16 years old; we refinance our homes, not to go on vacation, but to get our mortgage manageable in case of spousal death; we wear our clothes until they wear out; we get one haircut a year; we find slaughter houses that specialize in low prices for meats and travel 40 miles one way to buy meat; our splurge is on a few plants for the flower bed; we find food to can and freeze for the winter; this and more.
All this personal responsibilty on our parts to read our nation is 20 TRILLION in debt…I didn’t get any…did you???
I am furious and just received copy of Terminix contract in our mail box with MY name PRINTED on it!! YES!! they forged my name in print.
It is hard to say what the future will bring; however, it is not hard to see that after having the worst quarter reported in U.S. history, we are about to have another one. The results of that could be devastating. Survivable, but a punch you can feel. You can refinance your home today for 2.9% and any coins you saved for a bad time are increasingly becoming a good idea. Your portfolio may have been up 6.2% yesterday. That’s on the one hand. The other shows increasing prices with a precious resource -food- costing not only in price but in time if finds to locate (availability). The lawlessness areas are not helping. Of course these areas are plugged into the national network of supply and demand so when shootin’ & lootin’ become daily events commerce can have trouble, like cost, time and performance. Oh, and the virus. The future can go many ways but I consider “shelter, water, fire and food” and of these food worries me the most. That, vanloads of hungry looters moving their nightly business into the suburbs and countryside. Financially, the truth is that America has spent too much and demands are increasing. Taxes must as well. This is unsustainable, a “tragedy of the commons.” And we’ll leave this planet with every penny we brought with us.
A.S.
Thanks for your great comments!
So many issues you mention are a concern. We are all seeing the insane food inflation. How many of us know someone out of work, or a small business already shuttered for good?
And the looting and lawlessness, combined with this “defund” movement.
I agree it goes back to what we can each control – our own debt, our preparedness levels. It amazes me we’ve made it this far, I figured a meltdown would have already happened. I said it elsewhere on this thread, it feels like we are on borrowed time, doesn’t it?
Perhaps a couple of symatamious proxy wars will gobble up the surplus freedoms left to us. Let me take a couple of guesses, India/pakistan, North/South Korea, Israel/Iran, ….. Good jobs at Ford and GM making war supplies. All spending will be overlooked. But, I don’t think one will be able to make friends gifting chocolate and nylons in these wars.
hermit us –
War is big business. Sadly, there are many companies who sit in the board rooms during fiscal slumps and say “What we need is a good war. That will really increase our profits!” Literally no conscience about what it would mean to the average citizen, just the $$$ signs for them.
M’Lynn
Just had the headline, “Tensions mounting with China,”
Remember what they say…. “War is good for the economy.”
Only the caveat now, USofA doesn’t have the industrial
might that it once had.
“Poor dumb bastard dies for his (corporate) country.”
When currency is not redeemable in gold its value depends on the judgement and conscience of the politicians. What could possibly go wrong?
Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any thing but gold and silver coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
Hahahahaha! The Constitution? How quaint.
(/sarc off)
Unfortunately, the bureaucrats refer to the Federal Register for marching orders instead. >200k pages, contradictory and will not fit in a large room with the help of lawyers.
200k pages. So your saying it’s a light afternoon read? Hehe
That’s INPrepper, not Hehe
Ken
Dear Sir, your comment is so true, and yet, in the same moment
so very tellingly sad.
Been thinking about this for a long time, if or when the S(really)HTF, is it gonna matter how much in debt you are? When someone comes to repo something you need to survive and everything around you is going down the toilet along with everyone else are you really going to let them take it?
bluecatmatt and cid,
Thank you both for your comments. I have to agree with cid… I sleep better at night with no mortgage and no car payments. I would rather not be in the position of having to find out what happens if I’m in debt and the SHTF.
I wouldn’t want my plan to be hoping that no one comes to repossess anything when everything around me is falling apart.
So Cal Gal, even with no payments due your yearly land rental (land Taxes will be due and payable) with no income how does that work out… I don’t see them holding off on collections… Our county/state does not allow to be paid in advance.. come out in October.. must be paid by Feb. 28.so you know what my plan is… to have that reserved so can be paid as soon as they are in hand.
Hopefully for those in debt, the debt is tied to nothing necessary. Like if you have a loan for a tractor, hopefully it is a personal loan that does not have the title to the tractor on it. Or maybe credit card debt. It would be better to declare bancruptcy and wipe out the debt for tangible things on hand than to lose the things you need for survival. Is it right? No judgment during survival.
Pegasus
If you declare bankruptcy, in many states you can keep your
car and house, but your possessions, i.e. your prep will be in
forfeiture, check into states rules.
I thought the rules were changed several years ago that credit card debt is not absolved through bankruptcy. So if you file for bankruptcy, you still have that CC debt afterwards. Kind of like student loans. Student loans are not affected through bankruptcy. But if you become disabled to the point of not being able to work, the loans might be absolved. Or, if you die, the loans will be absolved unless there is a cosigner. Then they will be stuck paying for your student loans.
If you become disabled they will take all unpaid medical bills, any workmans comp and any unpaid loans will be taken from your lump sum you will wait 12-36 months for approval.. seen it happen time and again.. One lady was applying for 5 years, got approval and first check was 125$… instead of the 700-800 minimal disability.
If you are in danger of losing your home, burn it down before you default. Simple.
Cooking fire,,,
Damn,,, shouldnt have been frying tempura in that turkey frier in the kitchen!
Bluesman
“Common Man” (So sorry, couldn’t help myself) You know that almost
never, do the off-spring of TPTB find it necessary to sully themselves
in the much and mire of conflict. They do that in the swamp instead.
all, “muck” not much, fumble fingered old man syndrome.
k-bay,
One can only hope and pray the offspring would participate on the front lines , but as you infer , highly unlikely.
MSB Troll, I don’t agree with your first sentence. Many have their “house in financial order”, and it could involve stocks, or bonds or savings..depending upon the risk that person is willing to take. You would still monitor signs/trends for any necessary shifting of resources that is needed. Our personal philosophy is don’t put All your eggs in one basket.
That being said, it is always nice to hear from long time readers. 👍
Bluesman, I agree. We were given a gift of a few more years to get ready. Stay out of debt, stay out of crowds, and get right with a God.
Great article and excellent comments all around.
I have to agree with those that say : “What does it matter if you’re in debt or not, when TSHTF !” When that time comes, are there going to be Bill Collectors coming around ? I don’t think that you will be thinking about how much you owe, at that time. You will be in ‘Survival Mode’.
‘Close the gate and batten down the hatches.’
JoeFriday SHTF sometimes comes in painful stair step failures like a drunk stumbling down a set of stairs. Seldom aside from an Alien Invasion or a Bright FLASH occurs overnight.
Plenty of time for Tax collectors and such to collect for dear uncle Sam. The Governments #1 Directive to Survive and grow more powerful. #2 see #1.
During the great Depression a SHTF situation for a lot of Americans folks lost their homes and farms to bill collectors INCLUDING Tax Debts at the Courthouse Steps with Bankers, tax collectors and armed Sheriffs to make sure it went peacefully.
There is a good reason why popular culture glorified bloody handed murderers like Bonnie and Clyde for “Sticking it to the MAN” even thought they were NO Robinhood steal from the Rich to give to the Poor. Folks were angry that all they worked for was gone to fat bankers backed by armed police forces.
Stay out of Debt, HAVE a way to Pay Taxes, worst bit of advice I hear is Max out the Credit Cards because when SHTF nobody’s going to collect….Aside from being theft just like the “Peaceful Protestors” robbing and burning our cities, the SHTF scenario might take a long painful year or more where Bill Collectors backed by banks and Armed Police as well as Tax collectors getting their money.
Dead or in prison is a bad way to leave your surviving family when SHTF.
So Cal Gal:
Very nicely done Article.
Thanks for submitting this, and helping Ken a little.
Told you he’s a good editor LOL
I happen to agree with your assessment on the Toilet the economy is heading for.
Hence I prefer to “have in hand” and paid off.
I do smile, you have come a very long way since those first days you showed up.
You’re a great asset to the BLOG for sure.
A good person to call a friend.
So Cal Gal,
I have been looking for your input on this Fitch Rating since you mentioned it last week. Thank you, Ken, and all for the discussion.
Yep, we are screwed and not enough time in my opinion to be ready for some very dark days ahead.
Well that didn’t post where I meant it to. My bad.
NW Mitten,
No worries, a couple of mine got a little off where I am meant them to go, too :)
Thanks for your comment, and I’m really happy that Ken was able to pare down my article and make it work. We (as a nation) are on a really scary trajectory. When a rating agency comes out and says they actually adjusted our rating to keep at at AAA, and their software says we should be AA – that is such a HUGE alarm to me. How many people will take the time to read this and know where we are heading?
I also think we are screwed – I keep saying we are on borrowed time, and I believe that. That’s why I hope those who have not yet set their financial lives straight best hustle up… we don’t know how much longer our borrowed time will hold out.
JoeFriday,
I suppose it depends on exactly how bad the SHTF is. But, in a true depression (as Ken has written about more than once here), I would much rather know my home is paid for (except annual taxes), my vehicle is my own, and no one is looking for me to try to take anything over debts owed. Life would be hard enough without losing my roof, my wheels, or anything else.
SCG; I too have hm pd, cars pd, no debts, svgs/ok cking acct. let me tell you of a nightmare I had last Autumn. A suit with 2 security guys in Tåctical showed up at my door. Suit said he was from the state (Ca). He was here to advise me and friend (co-owner of home) that he’s here to advise us that by executive order our home will be trans to a young college educated couple with 3 kids who have fallen on hard times but employed by the state. Now, he says, because you live next to a family park, easy access to two freeways, close to shopping, etc. our home is ideal for this couple/family, now we’re not to worry, we will be transported to a Senior’s facility, everything will be taken care of for us, ya know, housing, food, dental all that stuff, we’ll never have another thing to concern ourselves about ( smiles). Oh, since you’ll be taken care of, you would not need your cars, those will be redistributed, and we’ve voided your dr. licenses and we’ve secured your svgs, cking, IRA and mutual fund, that’ll go the senior ctr. for expenses. Since your both over 70 this is all covered in the E.O. So, you can each pack 1 suitcase, limited space ya know, we’ll take of everything inside, no expense of course, you’ll be picked up tomorrow at 12:00. Now, family can make an appoint to visit once a month, have to visit outside, can’t have too many visitors at one time ya know. He hands me a packet of papers, says it’s all explained in there, turns to go. I yell, that’s illegal, you can’t do this, my homes in a trust, it’s paid for, he waves, says we know all about both of you, everything, two Tåctical guys stare me down then follow suit. That’s when I wake up shaking and mad as h#$@. 4:30am. Where did that dream come from ?? Have had the hibbie jibbies ever since. That nightmare is burned into my brain, all too vivid to real, remember every word. The way our state & country is going, who knows. Very strange. They’ll think they struck the mother lode inside my home! All redistributed of course.
A real nightmare that is very likely to become truth to many. Governments need both money to pillage and redistribute as well as the support of their desirable citizens. This scenario has happened many times in various places where Socialism-Communism took over. The “Rich” Kulaks robbed and displaced-murdered by the Bolsheviks of Russia, the Maoist No Old’s campaign with their Red Guard, many other smaller examples.
We went from knowing our neighbors, helping each other in disasters and working together to get things done to living in our personal cocoons, waiting for FEMA and ordering out from Amazon. Do you think that was an accident? Or social conditioning so we wouldn’t have a interconnected web of friends that would back us up when trouble came?
So folks take this dream-nightmare and think what would be your realistic options if it went down on your door?
Winter is coming, plan and work that plan. Less than 80 days.
Is why my heart and soul says they can have the ashes and ill be under and part of them
NRP,
Thank you my friend :)
When I sent this to Ken, I told him I was taking you up on your challenge to submit articles to Ken to help… but Ken still had to pare it down and do plenty of work, so I’m not sure I was much help!
And thank you for your nice words – how far I’ve come is due in very large part to Ken, you & all the regulars here the last few years. All of you have taught me about preparedness, self-reliance and heightened awareness. I am no longer one of the masses, or a sheep, because I took that red pill. Once you’ve seen things through that lens, it’s just impossible to un-see them.
It just breaks my heart (and makes me mad) that we have come to this point in our country. I am so glad to have you as a friend!!!
NRP so glad your still here haven’t seen any post from you lately. Hope you and blue are doing fine. P.S. Better buy some more tp while you still can.
SeaBee:
Seriously in these comming times of troubles…
“Is 600 rolls really enough”?
SoCalGal has a heck of a good meaning in this Article, and the comments reinforce the point.
Paleo,
Thanks for your comment – inflation is insidious! It eats away at our savings, creates a serious strain on those living on a fixed income and generally nails us consumers… as you say.
And absolutely yes, we have a lot of people on the left who think socialism is the way to go. To redistribute wealth and drive people into poverty and thus into the waiting arms of government who never, ever has the best interest of “We The People” at heart. The more broke and desperate people are, the more willing they are to relinquish their freedom in exchange for perceived (but not actual) security.
Unfortunately the George Floyd thing should have united us and yet it has been used to divide us. I do not think the MSM and those willing to take down this country will ever let anything unite us again.
Everyone like George Floyd should die the same death as his… A self-inflicted drug over dose.
Bluesman,
Thank you for taking the time to read and comment :)
Completely agree that we are on borrowed time, and that we have had these past nearly 4 years to get our financial acts together. I am thankful every, single day that we were able to sell our business, pay off the last of the mortgage, and get our BOL during this time. We’ve done our best to be as prepared as we can for what many of us see as storms ahead.
I truly am amazed we made it this long. And it is incredibly aggravating that politicians and their families seldom reap what they’ve sown. They are a mostly protected class who live in a different world than the rest of us.
Nice article So Cal Gal. This line especially got my attention:
“If nothing else, I hope this info encourages you to keep a close eye on not just daily stock market activity (which is highly volatile as we all know).”
My take is, it really depends on what you’ve got a close eye on. Most of the market is tanking but there are several very large corporations that are not only doing “just fine” but are going to the bank during this Pandemic. Apple recently split 4 to 1. While not the 7 to 1 split of several years ago, it made me enough money to smile for two weeks. Amazon stock is making record climbs on the market. ATT, Microsoft, all the companies you would expect to make big money during this pandemic are doing exactly that. I won’t even mention the billions of dollars Pharma will make when the “vaccine” is released. My broker “whispered” to me, “follow the money” and you’ll discover what this virus is all about. BTW, you do know that the vast majority of PPE is Made In China, so are phones, computers, TV’s, etc. Everything we need to stay at home from the country that gave us the virus and is now making bank on it. Makes you wonder.
Eli,
Thanks for your comments – glad you liked the article.
You make a good point – there are winners and losers in every market move. While some industries are tanking, others are climbing. Some people have lost a fortune shorting the market (no doubt figuring fundamentals were on their side) while the Fed is keeping the markets cranked with lots of buying. There is always a way to make money – especially for those with an inside track or maybe the foresight to see who would do well in a certain type of downturn.
And I knew we had a TON of goods made in China, but everyday it seems something turns about to be made there that I no doubt took for granted. Its a sad state of affairs when our country has lost so much manufacturing that we can’t even supply our own needs.
So Cal Gal, Thank you for your time.
Mrs U,
Thanks for taking the time to read it!!!
So Cal Gal
Great to see you do an article!
Good job.
I’m a financial sloth, so I have no comment.
Most everything above my head, but I got the gist of it
I’m a lowly man, I must say.
Joe C,
Thanks!
Financial sloth and lowly? I don’t think so 😉
Any way you slice it, we as a country have too much debt and keep trying to print more money and prop up our markets to climb our way out. Like trying to climb out if a hole by continuing to shovel.
The US gov can mint platinum coins. This is from Forbes. What it would really do is ?????
$1 Trillion Platinum Coins
The ABC Act would be paid for by minting two $1 trillion platinum coins, and additional coins as needed.
While most non-coin collectors have never even heard of U.S. platinum coins, they are actually well-known among serious numismatists. The U.S. Mint already produces several platinum collectible coins, including the $100 coin seen here. Incidentally, the $100 face value is currently the highest denomination for a U.S. legal tender coin.
Of course, the $1 trillion coins, if minted, would not be designed to be spent. They would simply be the method for funding the ABC Act without creating new debt.
I stand corrected. I thought it was a $1trillion gold coin they were talking about. Funny thing is gold currently is worth more than twice that of platinum.back in the 90’s, it was reversed. Platinum was more valuable than gold. That shift happened a few years ago.
It interesting about platinum. It was a higher standard for items like a Platinum record album or jewelry. Thieves were stealing catalytic converters for platinum. People are gold minded, it is in the DNA.
Wasn’t trying to correct you. Thought it might add to the topic.
Is there a solution to the debt hole this country is in?
How much of government spending would need to be cut just to balance the budget? Certainly more than all the discretionary spending plus some of the entitlements.
How much of government spending would need to be cut to pay off the total US debt, say over 10 years? All spending and still the debt would balloon because of interest. So, no social insurance, no medicare, no SNAP, no military, ….
We are looking at a problem with no solution.
hermit us,
Thanks for your comment, and I have to agree. I do not see a decent solution, either.
The same Governor that have stimulus to illegals
Chief Little Fish: Are you still out there? Really enjoyed your posts and updates. Thanks!
That’s the plan…they mean to destroy the country and bringn on the New world order
What I also read in the report . . . . “Fitch considers U.S. debt tolerance to be higher than that of other ‘AAA’ sovereigns.” . . and . . “Fitch expects the economy to contract by 5.6% in 2020 and recover by 4% in 2021, with the massive fiscal policy response averting a deeper downturn.” . . and . . “Fitch expects inflation to remain low, averaging below 1% in 2020-2022.” . . and . . “As the output gap closes, Fitch expects growth to average 2.2% in 2023-25, above our revised estimate of potential growth.” . . and finally . . “The addition of a +1 notch adjustment to reflect the swift and effective monetary and fiscal policy response to counteract the economic shock of the coronavirus pandemic, which Fitch views as having mitigated the impact of a rise in growth volatility on Fitch’s model-based indicative rating, and which Fitch expects would adapt to take into account both the economic outlook and the long-term outlook for the public finances.”
. . . .
The retention of the AAA rating is explained. The negative forecast is only for for growth this year over last; 2019 saw a GDP growth rate of 2.3% and Fitch is forecasting 4% in 2021.
. . . .
Prudence dictates we responsibly manage our personal finances, of course. However, the national state of affairs is not so dire, imo.
“Prudence dictates we responsibly manage our personal finances, of course. However, the national state of affairs is not so dire, imo.”
Well stated. I agree. Though many companies are struggling, the ones (as I mentioned in a previous post) that are “raking it in” are well ahead of the margin. I would guess that many are banking (no pun intended) on the vaccine. If it is a success, 2021 will be a blockbuster year in the markets. 2020 was a blockbuster year for those who paid attention to the trends and bought judiciously.
Anony Mee,
Thanks for your comments, and for taking the time to read the report. I included many of the items you list, but to keep the article to a reasonable length, Ken had to trim much of it down.
Although Fitch describes their reason for retaining the AAA rating, they noted that their were factors that “were not quantifiable”. My thought was, I’ll bet they are not quantifiable. They are saying that we did a good job of heading off a crash due to covid, but at the same time are saying that our debt is showing no sign of being manageable, nor are there any appearances that we have any kind of cohesive plan to deal with debt. SO on the one hand, they say good you did something about the situation, but the thing you did actually made your long-term problems worse.
Further, although Fitch downgraded other countries in recent weeks, we are the only report I saw where they “adjusted” a AA-rated country to AAA. Every other AAA I read made no mention of an adjustment to the rating. And, if the criteria for the adjustment include the facts that we are the largest reserve currency, and have a huge economy and almost unlimited ability to moderate our financial condition through issuing currency, then I don’t feel too good about things.
Personally, I believe we are being warned. Our debt is too high, we are printing too much fiat currency, and our economy is shrinking. Who knows how many businesses and jobs are not coming back once covid shakes out? Who knows if we are going to be subject to more lock-downs or other restrictions if a second or even third wave of this overblown virus come our way?
Perhaps I am too pessimistic. But, I see it as a serious threat, among many we are facing right now. I would rather you be right, though :)
Let’s say we had 10 piles of poop. One pile had a nice white covering on top. So, of all 10 pikes, it is the best looking. But, at the end of the day, the fact is they are all just poop. The US dollar is the white covered poop..
Actually no political solution is ever going to be reached onder the current system!
All or most all in office today are wealthy or rapidly becoming so. They have no interest in the common man’s problems and would actually be hurt by bitting the bullet and fixing the problem!
These people don’t care if you lose everything, including your family. All that matters is their bottom line.
It is a sad fact that things are this way but we all have to accept the facts and pull up your big kid pants and get to work!
You have to do everything yourself, grow a garden, can some food, get a couple of chickens,cut firewood, button down the house for winter.
We are it! We are MSB! We can and will have to carrey on!
The doom and gloom I have been reading tonight will not help us!
I come back here regularly because everyone here has so much knowledge and spirit, we are sure things are going to heck in a handbasket but we go forward because we have others that depend on us!
I am sorry if I sound disturbed but think with what will be hard work we will pull thru especially if we pull together.
NW
Good words, sir
North Woods,
Thanks for your comments, and the bottom line is that each of us does have to find our own ways through difficulties. There is no political will to stop running up our national debt, so each of us can only get our own finances in order and be prepared to weather the storms that appear to be coming our way.
I wrote this to bring the current storm warning to light, and hopefully to inform and motivate – particularly to motivate those who need to take action and get moving 👍
For Your Info :
Do you happen to know who the worst offenders of uncollected debts are ?
LAWYERS !
They DO know what you are obviously unaware of.
Paleo
I agree with Kevin, China already owns “Joe I’ll do your Bidding” and “Nutsy” Pelosi.
Encompassed within the progressive left’s plan is the kneeling to the new order
of the CCP’s dominance century.
Great article!! Seeing the way our Government handles our money is mind boggling. I just don’t think the Government can cut back enough to fix it if they wanted to.
This makes me sad, nervous and frustrated but mostly just angry. Some invested a little for their retirement I just hope its still there when and if we can do it.
Moving forward and keeping an eye open. Thanks again for the article. Time to get moving a little quicker.
Juls,
Thanks for reading and your comments. And I agree, the government is so huge, so wasteful and out of control, they couldn’t cut back if they wanted to, which they don’t. All we can do is get ourselves in financial shape and try to make good choices. If this article and all the comments got you thinking, I’m so pleased! Take care.
Hmm, reading this article brings to mind a true story that my Dad related to me many yrs ago. Dad was working with a WW1 vet right after WW2 and they were talking about the economy on bad it was at that time ( 1946 47 ) and the old WW1 vet maee the statement ” if they need money they will just turn on all those printing presses that the government has stocked up on “. And you know something, they gov is still doing it, printing money like it is going out of still
Alfie,
Thanks for your comments, and all those printing presses are sure working overtime right now. I guess some things never change – there are just degrees of more or less.
“Bad economy” for the controllers and “bad economy” for the people has always had a very different definition. Good for the controllers means they can transfer assets into their own pockets. So their efforts go to making sure that as many people as possible are in an unstable condition, where their assets are at risk. During stable times, when not as many assets are at risk, they focus on making sure that people are taking out loans, mortgages, or making risky investments, with the intent that some of that will fall into their own pockets. They leverage the money supply, as well as the social and political sphere, in order to create unstable conditions.
Another thing they do is to make people BELIEVE times are unstable, or to make people believe times are stable when they are not. If a person believes he is on solid ground, he is more likely to make bad financial decisions (such as balloon mortgages or investing on margin). If he believes he’s on unsteady ground he’s going to be more conservative and not take risks when they are appropriate, again allowing the controllers to take advantage.
Unstable is their bread and butter. The controllers do not believe that the system will crash, and they don’t want the system to crash. They just want their cattle unsteady and uncertain so that they can rake in the results of bad decisions.
Lauren,
Thanks for your thoughtful comments, and in “normal” times I would agree… that is, that TPTB thrive on chaos, uncertainty and people making financial decisions based on rumors, emotions, etc…
But, right now I believe we have a lot of people in power (whether public power or private, ultra-wealthy kind of power) who do not want our President re-elected… in fact, I think many of them would stop at almost nothing to see him out of office. So how far would “they” be willing to go? I would not put crashing the economy, including the markets, out of their reach – I’m talking about really crashing it… not just a dip and correction kind of downswing. I can picture these folks moving their assets out of harm’s way then swooping back in after they’ve done their damage. It’s been shown time and again that people in power care nothing for us “regular folks”, so any collateral damage (financial or otherwise) would probably not be a consideration. At this point, when it comes to the people making financial decisions for our country and our economy as a whole, nothing would surprise me. Yep, my heavy-duty tin foil hat is on a little tight right now.
Yeah, I didn’t want to go into too much detail. I think they miscalculated, as others have done in the past. Once the system reaches a certain level of instability it’s difficult or impossible to bring back into balance.
In case I missed commenting and thanking everyone who took the time to read and add to this discussion – thank you all!
We have a diverse and caring group here at MSB, and I appreciate all of you sharing your ideas, opinions and experiences… not just on this thread, but throughout Ken’s wonderful site.
My heartfelt thanks to all of you – I learn from you all every day!
So Cal Gal
Like Joe c, I am not a market analysist. You did a great job of presenting the data you collected. Mr. Ken did an wonderful job editing it down for us.
We watch the commodities markets everyday to see the vast fluxuations on items we as consumers require for daily survival. Well PM’s are a little hard to chew, but they do show us the devaluation of the green back for purchasing power.
Is everybody aware that earlier this year 2020 that the required bank reserve has been dropped from 10 percent to zero? That means if you deposit $100, the bank can loan out $100 and their books show $200 in owners equity assets. It is no wonder they don’t want to deal in cash, because you might withdraw their hedge cushion. Thanks to the 2010 Dodd-Frank legislation, the currency you put in the bank is not segregated as yours. You now are a partial partner of the bank and technically that currency is their’s to manage. It is not your money if its in the bank.
I carry a lot of debt. Automobiles.. houses… Blah blah blah. Probably half a million.
Why would I pay cash? It is cheaper for me to use some other rich (richer?) person’s money than my own. I borrow it at 0-4% and pay it back. Meanwhile I can use my cash for other things. Like investments. On a 0% loan I am actually making money due to inflation because I am repaying a debt with cheaper money. Due to inflation, a 4% loan is closer to 2% today.
What I am saying is, if you have good credit now is the time to borrow every penny you can at a fixed interest rate. Let’s say inflation goes to 5%… That means you will likely have money in your hand that is worth the same going forward. If inflation goes that high we will likely see mortgages back into the 7% range and money market accounts in the 3-5% range. So throw that cheap money you borrowed at 4% into a money market account and as you pay down the loan with cheaper dollars (inflation) you will be making money.
When I was in college I was taking cash advances of $30k at 0% and putting it into money market accounts paying 2.25%. I had zero assets and a net worth of MINUS $100k and a job that paid $10k.
While I have precious metals (silver) it is mostly to be able to buy my way out of a tough situation if greenbacks have no value. Real hedging against the future is with assets.
If greenbacks lose value it is because there have been so many shortages on stuff that it skews value/worth. The only reason the US dollar is doing so well is because everywhere else is doing so bad. Rich people need to hide their money somewhere. The Canadian dollar is at 70%, that should tell you that the world has gone to hell in a handbasket. We just don’t notice it because when the US gets into trouble the rest of the world is dying.
Pinkie – The “keep everything leveraged” merry go round works …. until it doesn’t. Everyone is at risk of a devastating injury or illness or loss of a well-paying job. If you are willing to gamble it will never happen to you and you can sleep at night, go ahead. Look at the fine print on the loans you are taking out, many have cross collateralization provisions. So if I borrow for my house, my car, and my business from the same bank and let any one of those loans go bad, they can go after the equity in all of my other assets used for collateral. If you borrow for your business, it is likely you have pledged all your personal assets as collateral under a guarantee even if your business is incorporated. I knew someone who “bet” a million dollars in his IRA overnight on an arbitrage play with the US dollar and Asian currencies. Said he needed to do so to fund his lifestyle like the reasoning for his interest only million dollar plus mortgage. It worked until it didn’t. And that was a very sad day for him and his family. On another blog I read daily, the writer said the following (paraphrased) regarding a future downturn from the virus’ impact on the economy – “When the music stops, you will be in situ, exactly where you are at that time and good luck making any changes in the future.”
Only credit unions can cross-collateralize. I’ve been telling people, including here for years, to never have deposit accounts and debt/loan accounts at the same institution regardless if they’re banks or otherwise. In fact, you should have nothing but one loan at each institution and only a checking account there that only enough money goes in to pay the loan.
Depending on the state you live in they can’t actually take your assets unless you don’t pay for them. So let’s say you have a credit card at a credit union and you want to make a payment on your car. They can redirect that car payment to the unsecured loan (credit card) then repossess your car for non-payment. They can also choose to make you re-affirm all your loans during bankruptcy, such that you essentially will lose your assets because they will repossess/foreclose on your assets.
I carry enough insurance, including long term disability insurance, to warrant comfortable survival of anything I care to survive.
I never said live beyond your means. I said let your money work for you and let other people’s money work for you. I get about $3500 cash back each year playing credit card rewards games. It’s free money for me, paid for by those who are awful at the game.
Stupid people and their money are often parted, regardless of how rich they are. Don’t be stupid and your money doesn’t have to wander off.
I have to read loan documents as part of my job. Cross collateralization is usually in every document and none of these are credit unions. However most are business related so perhaps it’s different for personal loans or for your state.
It is very common in business loans (even s-corp). It is way less common for people. Except most credit unions.
And yes, it definitely varies by state. But pretty much all credit unions do it.
PINKY:
So, hypothetically…let’s say I owe 20K on a 2-year-old auto loan to my credit union and pay on time via automatic payment (thru an OUTSIDE bank that then transfers payment to credit union) PLUS I happen to also hold $50K in a money market account at the credit union where I have my loan…are you suggesting I withdrawal the 50K and close that account altogether?
I’ve honestly never given any thought to cross-collateralization, but I can certainly see the point. One more question: how exactly would one explain withdrawing 50K altogether from said credit union? Would that not raise all kinds of flags and set off alarm bells? Would an appropriate excuse be, “I need to make the withdrawal so I can use the money for a down payment on a piece of land?”
Thank you much.
MSG12B
None of their business, why you withdraw your money.!
Don’t answer their questions, they don’t need to know.
The fact is, your safe, is safer than theirs.!
SMG:
I know that. But they WILL ask, and if I don’t answer (or fill out a form explaining), I will set off an alert with the Feds; it’s law (I think it has to do with the original Patriot Act). Something about withdrawing more than 5-10K (can’t remember) you have to indicate why or there will be problems. I cannot risk problems with my clearance. In fact, one of the reasons I left that money there (the 50K) was because I split much of mine up between several routes/places; didn’t want it all in one place naturally. But now I wonder if PINKY doesn’t have a point. If SHTF and the credit unions take a hit/all hell breaks loose, they could snatch the balance for the car via the money market.
Just thought I’d ask. I’ve had friends a few years back go to withdraw large amounts and it caused them problems and got them flagged. May have to reach out to them and get the deets.
MSG12B
. . . .
There’s something about going into a bank these past couple years that has set my teeth on edge. When I have to (very rarely) and the person behind the counter starts that chirpy nonsense I say “chit chat does not enhance my customer service experience.” I know it’s not very nice but it shuts them up every time and keeps my temper in check.
Never have a deposit account and a loan at the same place and for sure don’t do it with a credit union. Sometimes they don’t even put the dragnet cross collateralization on the loan, they put it on the membership agreement they made you sign when they forced you to open a checking and savings account for your new auto loan.
I even found one credit union by me that had in their agreement they can do ACH pulls from other institutions without your consent to try to recover funds.
By law banks need to report any suspicious activity regardless of dollar amount. So if you move it in $9900 chunks they will still likely report it. I would just get a cashier’s check. Nobody cares if you are moving $50k between banks. If they ask tell them you’re buying a new RV and that will pay the down payment.
I probably have 15 bank accounts and 30 credit cards. It’s a PITA to navigate sometimes but it is one of the few ways I can “make” or “cost avoid” money on my own time at my leisure.
It also helps land really good deals on loans. I have a 7% checking account and a couple cars at 1.249%. All offered to me to try to lure my attention.
PINKY:
I’ve been with this credit union for over 20 years (used to be employees only/DOD contractor I worked for; now it’s open to public). They’ve handled two previous autos for us and I’ve always had a money market account with them in addition to the basic account they require to open an account (again, 20 years old). I know these people. I didn’t give one thought to them mishandling my money, and I find it hard to imagine still that they would. They’re good people. I trust them. Got some thinking to do, I guess.
SS:
Affirmative to the Twilight Zone. People have done gone and lost their minds. Evil is good and good is evil. Scripture doesn’t lie.
ANONY MEE:
Mine, too. You feel like a criminal just walking in the bank nowadays. They lend out MY money to people I don’t even know and then make ME feel like I’m cramping their style or interrupting their day. Go figure. When we all remove our money, what then will they do? NADA. Step into the unemployment line with all the others, buckaroo.
MSG12B
Used to be $3K was number in the notification alert to IRS.
Some years ago, it became $2K, what it is now I don’t.
Pull YOUR $ in small amounts with frequent visits.
One for thought… A person recently told me that the
green stuff in our wallets is actually the property of the
Fed and should they demand return of their “property”
you are legally bound to relinquish it. Am I gullible or
does this person know something I don’t? “They pointed out
the title on the top of the bill with says that it is a Federal
Reserve Note, which ergo belongs to that private corp.
Now, this is the first I have ever heard of such and think it
to be “crock o’ crap” please tell me it ain’t so.
MSG12B
Take it out in small increments. One week you take out the amount under the gov requirement, next week your dw removes a different amount.
Each time one of says something different, have to buy food for the families animals large animals(great Danes eat lot, ask dh he use to have them) . It costs us more money for gas than we expected every month, or the kids need money this month. Going on a vacation/business trip, so this is our back up incase of debit machines are down. Which has happened on more than one occasion when we were able to travel. Those smartphones/plastic cards are not always accessible in some places, or the CC they use is not in your wallet😏😉
FYI- If you tried to take it all out at once they would give you a cashiers check so you could move it to the “other” bank. The other offer would be an electronic transfer. How do I know, bank teller was talking about a client who had to make a special arrangement to remove his “large” deposit from the bank in cash. The bank said they could not guarantee his safety, he replied no problem. Oh, and other thing was they did not have that large of sum on hand for his withdrawal on the day he entered the bank for this transaction. The bank had to make a ‘special request’ to have those funds delivered to them on the day the of his special appointment. Being a friendly chatty cathie, gets one all sorts of information.
AC:
I think I’ll probably just ask them for a cashier’s check and park it somewhere else. Miss the days where you could just trust good people to do the right thing and not have to doubt their goodness all the time. Boy, do I miss those days.
Those days are probably still there. It is, however, prudent to insulate yourself from as much nonsense as possible. Your money is yours, you do not have to treat it like a charity. If they can’t give you inflation on a deposit account definitely don’t keep your money there.
The financial institution sees you as a number. Sure, some people don’t, but at the end of the day the institution is there to make money. Otherwise all these small private credit unions wouldn’t have gone public and they wouldn’t merge.
I use a checking account at one credit union, a lot. They see a fair amount of money go through it. About once per year they ask me what it would take to have me as a customer for some of their other products. I always say the same thing: “competitive rates” and they always say “we have debit card rewards” and I always say “your rewards can only be used some places and is worse than the 1.5% I get back on a Chase Unlimited card plus a debit card has no protections”. Once in a while I’ll throw them a bone and finance a vehicle there. I’m sure the only reason they give me a better rate than what is on their sign is because they see all that money go through there and they know I’ll just take it somewhere else.
Well done article So Cal Gal. It has given me some things to consider and I made need to make some changes in how I handle my personal finances. I look forward to another contribution from you.
Thank You