Bank Run Preemption?
Please, please correct me if I'm wrong and I hope I am.
Could the new bank bailouts proposed by Obama and Geithner, you know the 1-2 trillion dollar infusion, actually be to cover a coming gigantic run on banks? I've heard that the value of the deposits in the banks is around the 1 trillion dollar range. If there were a massive run, the banks wouldn't be able to cover the withdrawals, and the FDIC would have to step in. The FDIC keeps it's paltry $50 billion dollar reserves (far less now) in banks so they won't be much help. Obviously, FDIC won't cover the withdrawals. Are they pumping money into the banks so that when people go to pull out their life savings, the banks would have the reserves on hand? Doing so would sort of pull the wool over the sheeples' eyes that the entire fractional reserve, fiat banking system is one giant scheme similar to the one Mr.Madoff recently popularized. It could also reinforce the false sense of security in the FDIC when it comes to the aid of those people who's banks couldn't give them their money.
Just my hypothesis.
Trillion
You mean 1-2 trillion.
New Hampshire and Ecuador
Thanks
Corrected
FDIC insurance
"The FDIC keeps it's paltry $50 billion dollar reserves (far less now) in banks"
Good that you are thinking about how this will work. I understand the insurance premiums that have been paid to FDIC are given to the Treasury, so there is just a book entry at the Treasury. There is no cash anywhere.
Our fractional reserve banking system creates money (debt) when it is expanding. The system is contracting and you are thinking through how painful it will be. Folks like Geithner and Bernanke should be scared.
It's possible to literally break a bank if enough people would withdraw their funds (in paper, or electronic transfer to some other place). The bank wouldn't have sufficient collateral and would be insolvent. Theoretically the bank would start calling in loans or selling loans. More likely the FDIC would shut the bank, cover some losses, and sell the rest to another bank.
http://FlipFlopRomney.blogspot.com
Folks like Geithner and Bernanke should be scared. Why?
They know what they're doing. You don't think our play money matters to them do you? This whole ordeal is supposed to coillapse the dollar, folks like Bernake and Geithner should be scared if people start asking for their home addresses, until then--it's all going according to plan. They're drooling for a good bank run and probably have an office pool on the date.
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Excellent
This is great observation. This could very well be the case. Guess we will wait and see. Remember things are never what they seem. I have been pondering the next few months and what to do if the SHTF.
I prefer a dangerous freedom over a peaceful slavery. Thomas Jefferson