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    Goodbye Constitution Freedom America by Don Jans

    A Mile-High House of Cards… 3 Ways to Protect Yourself Before Your Bank Collapses

    By Nick Giambruno

    Cash, gold and silver, and Bitcoin are going to be salvation for a lot of people during the next financial crises. From Nick Giambruno at

    It’s hard to think of a topic where following conventional wisdom is more dangerous than banking.

    The general public and most financial experts accept as absolute truth that putting your money in a bank is safe and responsible. After all, the government insures your deposits, so if anything were to go wrong…

    As a result, most people put more thought into the shoes they purchase than the bank they entrust with their life savings.

    However, the banking system is a mile-high house of cards that could collapse anytime.

    Here are three reasons why.

    Reason #1: Government Deposit Insurance Is a False Sense of Security

    The Federal Deposit Insurance Corporation (FDIC) insures bank deposits in the US.

    When a bank fails, the FDIC pays depositors up to $250,000. The FDIC has a reserve of around $126 billion for this purpose.

    Now, $126 billion is a lot of money. But, considering there are around $9.8 trillion in insured deposits in the US, $126 billion is just a drop in the bucket, around 1.3%, to be exact.

    In other words, the FDIC’s reserve has around one penny for every dollar of deposits it insures.

    It wouldn’t take much to wipe out the FDIC’s reserves. One large bank failure and the FDIC itself could go bust.

    For example, the recently failed Silicon Valley Bank—the largest bank failure since the 2008 crisis—had around $210 billion in customer deposits. That’s $84 billion more than the FDIC’s entire reserve.

    Reason #2: It’s Not Your Money

    It’s essential to clarify you don’t actually own the money in your bank account.

    Once you deposit money at the bank, it’s no longer your property. Instead, it belongs to the bank, and they can do whatever they want with it—like make stupid investments that would render them insolvent and unable to redeem deposits.

    What you own with a bank deposit is a promise from the bank to repay you—an IOU. Technically, you’re an unsecured creditor of a potentially insolvent institution.

    That’s why a bank deposit is very different from cash in hand. Yet the vast majority of people wrongly conflate the two.

    Reason #3: The Money Is Not There

    The money you think you have in the bank is not actually there.

    During the Covid hysteria, the US government eliminated all bank reserve requirements. In other words, banks are not obliged to keep any money on reserve to meet withdrawals.

    If only a tiny fraction of depositors demanded their money back, most banks would be in big trouble.

    This slimy practice is known as fractional reserve banking—and it’s totally legal, though only in the banking industry. However, that doesn’t change the underlying fraudulent nature of the activity.

    Imagine any other industry using a fractional reserve system, like a fractional reserve car dealership or jewelry store. The car salesman and jewelry store could then create more claims for cars and pieces of jewelry than what exists in their inventories. It would be clear such a practice would be fraudulent and similar to a Ponzi Scheme.

    Fractional reserve banking only works—temporarily—because banks can go to the so-called “lender of last resort,” the Federal Reserve, in case they get into trouble. The Fed can then create new currency units out of thin air to bail out the banks.

    For example, this doesn’t work in the car or jewelry industries because no “lender of last resort” can create cars and gold necklaces out of thin air to bail out fractional reserve car and jewelry businesses.

    Let me translate it into plain English.

    A “lender of last resort” means legalized counterfeiting of the currency to backstop a legalized Ponzi Scheme.

    What Happens Next


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    The views and opinions expressed in this commentary are those of the author and do not reflect the official position of Citizens Journal


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