Howard I Wiener
Aug 23, 2017 · 3 min read

So having a checkable brokerage account backed with treasuries…the purpose of checking is on-demand access to cash. if it is back by treasuries, that is too volatile on a day to day basis to allow a person to confidently deposit knowing that they will retain the same purchasing power. in other words, if you deposit $1000, and the treasuries fall in price, your backing causes your principle to fall as well, leaving you less cash to access tomorrow than you deposited today, and all you did was go to sleep. I don’t like that idea. that said, keeping cash in treasuries for a longer duration may be a prudent choice, depending on when you need the cash and what you need it for. and if you’ll need the cash to pay for everyday living expenses or perhaps a medical facility for a loved one, the best choice would be zero interest checking (a fee causes it to be negative interest) or money market. both have deposit insurance up to $250K. however, an uninsured account as you’ve suggested may be a foolish move.

regarding the need for up to 9 days to transfer money…that’s just not true anymore. if you have a checking account you can wire large amounts on the same day. chase pay allows you to transfer from your account to someone else within 1 business day. if you have a brokerage margin account you can sell a security, and without having to wait for it to settle you can ACH the cash to your checking. My TD Ameritrade account does it within the same business day as long as I put in the request early enough, and my Chase checking account releases the funds next business day. The only deposits that take time anymore are “large” checks, and depending on who you bank with that could be up to 10 business days. any type of electronic transfer doesn’t require that much time any more.

and about giving money to banks for free…first of all you are not giving the bank money. it’s cash or currency. money stores value, and the cash you deposit has not done that since the establishment of the federal reserve in 1913. the US Dollar has lost about 96% of its value since that time, and therefore does not qualify as cash. Even though it holds the other 6 properties of money, it’s missing the key point of storing value. no currency in the world at this time does that in fact, as every country is now on a fiat currency system, meaning governments mandate it, or more simply “it’s cash because we said so and our guns are bigger than yours so you have to comply.” anyhow, about that free deposit and bank balance sheets and deposit insurance. no consumer cares anymore what the bank balance sheet looks like when they make their deposits because everyone knows that it is guaranteed by the government program called “FDIC”. so no one bothers to check out bank balance sheets. if we would be forced to, no one in their right mind would deposit today because banks are in worse shape now than they were in 2007 before Lehman and subprime mortgages came crashing down.

and speaking of subprime mortgages, short term debt is not the contagion of all financial crises. the subprime mortgage mess was long term debt. the savings and loan crisis in the late 80’s was long term debt. in the current state of affairs, all debt will be the cause of the next avalanche, regardless if it is short term or long term.

there’s quite a bit more that could be said, but i would urge you to check out my blog postings at seeking alpha. i go into these topics on a much deeper basis over there. here is the link to the latest:

https://seekingalpha.com/article/4096761-wherefore-art-thou-romeo-jobs-jobs-lack-thereof

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    Howard I Wiener

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