Evening all....
I’ve been thinking quite a bit lately on all the different scenarios that could transpire with the way this country and the shakiness of world in general.
My mind never wants to shut down, which probably explains why I don’t sleep much or at all some nights.
While there are many different scenarios that could happen, on this post I’m primarily going to touch on fiat and the banking system.
This post will not pertain to anyone living outside the United States, but it may give you some education and insight of one of the major issues that I see coming at some point.
The banking system as a whole has been broken for many many years now. But it was made 500 times worse in 2008 when the Fed bailed out the banks. They plunged 700 billion dollars, yes 700 billion!!!!! To bail out the failing banks.
Well what do you expect to happen when you lend two to three times what people can actually afford to pay. So people walked away from their homes leaving the banks holding the bag. Along with the housing market there were over 300 billion in bankruptcy cases the banks also had to eat.
In 2010 after the bail-out Congress passed a bill that now puts all the burden on anyone with their hard earned money in the banks holding the bag. Yep the money you have in the bank is no longer technically yours. The easiest way for me to explain it is you are technically a shareholder of the bank now not a depositor. So if the banks fail they will use your money this time to make them solvent again.
Here is a more in depth article explaining it.
Why Bank Bail-Ins Will Be the Bailouts
BY RICHARD BEST Updated Jun 25, 2019
The financial crisis of 2008 ushered in the term "too big to fail," which regulators and politicians used to describe the rationale for rescuing some of the country's largest financial institutions with taxpayer-funded bailouts. Heeding the public's displeasure over the use of their tax dollars in such a way, Congress passed the Dodd-Frank Wall Street Reform and Consumer Act of January 2010, which eliminated the option of bank bailouts but opened the door for bank bail-ins.
Difference Between Bank Bail-In and Bank Bailout
A bail-in and a bailout are both designed to prevent the complete collapse of a failing bank. The difference lies primarily in who bears the financial burden of rescuing the bank. With a bailout, the government injects capital into the banks to enable them to continue to operate. In the case of the bailout that occurred during the financial crisis, the government injected $700 billion into some of the biggest financial institutions in the country, including Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C) and American International Group (NYSE: AIG). The government doesn't have its own money, so it must use taxpayer funds in such cases. According to the U.S. Treasury Department, the banks have since repaid all of the money.
With a bank bail-in, the bank uses the money of its unsecured creditors, including depositors and bondholders, to restructure their capital so it can stay afloat. In effect, the bank is allowed to convert its debt into equity for the purpose of increasing its capital requirements. A bank can undergo a bail-in quickly through a resolution proceeding, which provides immediate relief to the bank. The obvious risk to bank depositors is the possibility of losing a portion of their deposits.