Anyone that has played the board game Monopoly knows, “The Bank never goes broke. If the Bank runs out of money, the Banker may issue as much more as may be needed by writing on any ordinary paper”.
It’s literally against the rules for the bank to go broke.
The game of Monopoly applies outside of board games into the real world (unfortunately). And it’s no coincidence the game is called Monopoly: although you may think the objective of the game and how to win is to create a monopoly — in all reality it’s more the bank is the monopoly — the monopoly that can never lose. And as history shows, bankers never lose. The bank never goes broke.
If you remember in ’08 banks were “too big to fail” and banks received tax payer funded bailouts which went to banker executive bonuses.
The pubic often forgets a bank is a business, a business that makes money on making loans (interest). If banks make money on loans, they’re incentivized to make as many loans as possible. Obliviously they have to do so carefully as to not exceed cash deposits or reserve limits, and to remain solvent. Unless you have John Q. Public to take the brunt of your bad business decisions.
When this particular business is set to fail due to poor business decisions (i.e. lending to poor candidates, lending too much, not reserving enough cash, etc) and it starts to reap the rewards of bad business investments, it never fails: the banks get bailed out in some sort of fashion.
Imagine owning a business that literally cannot fail no matter how big your malinvestments are, no matter how risky your decisions are, no matter how irresponsible you are. You get to reap the rewards of making risky decisions, but you literally never lose if it goes against you. When you do lose, you get to place the blame on other factors (“trade deficits”, “weak economy”, “Coronovirus”) and have tax payers bail you out, ‘for the public good, of course’. That would be a sweet setup — a setup only a banker could have.
“The banks did not fail because the system was weak. The system failed because the banks were weak.” I’m not going to explain how the banks are weak and why the federal reserve system is a scam — that’s a whole other post — but for now, just know throughout history, when the banks fail due to their recklessness, they have always been bailed out. The bank never goes broke. Proof? Here’s just a few recent cases of the banks never losing and all losses being socialized.
You probably think, “Yea that’s kinda screwed up and unfair, but why would I care? The federal government does far worse with our money”. There’s a plethora of reasons why the Federal Reserve Banking System is evil, corrupt, and should be completely scourged from Earth, but I’ll only dwell on one reason now — the next bailout and how it could personally effect you.
“Coronovirus”, the “Chinese virus”, “COVID-19” — is now to blame for the weakness of banks. In all reality, it was just the needle that caused the pop, but it didn’t create the bubble. Remember, the banks did this. The classic “place the blame on others”.
The banks have already started whinging some, blaming the virus. Of course they won’t tell you they make over 8900% Rate of Return on bank deposits for years and years by creating fake money and lending it to consumers. They won’t step up and say “we created an asset bubble, we’re to blame for this”. Remember, it’s the coronovirus’ fault.
And of course, the public will come to rescue the banks. Not for the bank’s benefit — but for the public’s benefit of course! You wouldn’t want to see the banks fail would you? You wouldn’t want the airlines to go bankrupt would you? Of course not.
So John Q. Public will once again step up to the plate and pay the bill. Imagine the public being a rich father that’s always on the hook for his step-son’s bad behavior: He always bails his step-son out of jail, declares bankruptcy on his behalf, pays for his rent. The step-son will never take the brunt of his bad decisions — the father will. Now imagine the son saying “you have to bail me out of jail for your benefit Dad. You wouldn't want to see me fail would you?”.
How they’ll bail out the banks this time is TBD, however I can speculate. **Please remember, this is my speculation — the reason I write this is so the people I love, friends and family, coworkers, acquaintances, ANYONE! can take preemptive measures in case this type of bank bail out (or in this case “bail-in”) happens. How you chose to take preemptive measures is ultimately up to you, although I will hint on how I am.**
Post 2008, people were pretty pissed off about bailing out the banks when they made incredibly bad investments. Not only did that piss people off, but the taxpayer money was used to enrich the bank execs with lavish bonuses — which really set the public off. So the government basically worked out a deal with the bankers with the Dodd-Frank Act, “No more bailouts. Next time, you will not receive public money for your bad decisions”.
That’s good news right? On the surface, yes, but the devil is in the details. Refer back to the Monopoly game: the Bank NEVER goes broke. In the same Dodd-Frank Act (in fine print), in the case of the bank’s insolvency, instead of John Q. Public stroking a check to bail out the banks, the government will step in directly to ‘help’ with bail-ins.
How does the government conduct these bail ins? In simple terms, the FDIC will step in and oversee and take control the operations of the bank. This all seems well, until you realize the legislation clearly states that the FDIC will force shareholders, creditors, and depositors to bear the losses of the failed financial company.
The key word is depositors. If you place money into a bank, you are considered a depositor. The government is here to help! With your money of course.
You probably believe when you place your pay check in that vacuum tube and see the digits on your Wells Fargo App go up, that money is yours. Au contraire. They are in fact a statement of what the bank owes its clients. The funds you deposit are no longer the property of the depositor (you). Instead the depositor (you) become an unsecured creditor or lender to the bank.
The Dodd-Frank Act was mimicked after the European Basel Accord. A test run of this “bail-in” already occurred in Cyprus in March 2013. Bankers once again faced insolvency due to their bad decisions. In a cry for help, the Cyprus government closed down the Bank Of Cyprus. Of course, the larger stockholders of the bank exited before knowledge of the insolvency became public. The rest of the shareholders were almost completely wiped out and 21,000 bank clients who had deposits of more than 100,000 euros saw 47.5% of their unsecured savings converted to equity, making them 81.4% owners of an insolvent bank. Once the bank re-opened, depositors began to panic and try to withdraw any cash possible, only to be met with long ATM lines and strict withdraw limits.
So to summarize, the Cyprus bank made risky decisions, it blew up in their face and and they faced insolvency. The government came in (after major shareholders left of course) and used the remaining depositor's money to keep the bank solvent. They then gave an “IOU” scrap piece of paper to the rest of depositors (instead of their cash), and said, “Congrats! You now own shares of a defunct bank”. Tell me, if you deposited $100,000 in a bank, would you be okay with having half of it taken and replaced with shares in a bank facing insolvency?
You might think, “Well, here in AMERICA, the FDIC insures my deposits up to $250k, I’m good”.
According to the FDIC website, the current insurance fund to protect consumers in the event of a bank run or bail-in is $110.3 Billion. That sounds like a nice, cozy amount… right? Until you realize there is 18.2 Trillion (with a T) dollars in the commercial banking system. That’s how much money people have in banks. The FDIC “Insurance Fund” can cover 0.6%, not even 1% of the assets (money) in the commercial banking system.
To give a perspective, the FDIC insurance fund could cover everyone in the United States for $337. However, if you believe the FDIC insurance fund would consider every one equal and distribute it fairly, you’re delusional. Just like the Bank of Cyprus run, the bankers, shareholders, and closely connected will get first pass at looting the FDIC insurance fund. Even if they *did* distribute it equally, what’s $337 dollars? That’s maybe a month of groceries for my family.
By this point, I hope you are extremely skeptical of banks. You should be. But I want to be a beacon of hope, instead of ending this story on a bad note. I believe there is ways to protect yourself. You may not agree with my methods, but you should at least take actions you believe would protect your life savings.
It’s no coincidence during the 2013 Cyprus bank run, Bitcoin shot up 1600%.
You may wonder.. why? How is Bitcoin correlated? Most people I try to explain Bitcoin to don’t really understand it, especially when it’s described as an “encrypted block-chain technology to distribute a decentralized ledger enabling peer-to-peer transactions”. I can see your eyes glossing over now. People think it’s fake internet coins, or a tulip mania, or a pump and dump scheme. Yes — Bitcoin caught the attention of the public when it ran up to almost $20,000 with it’s price action. But we have to understand: Bitcoin was made specifically for situations like this. To describe Bitcoin simply: it is a way to send money (value) to someone else without a third party (banks/governments). Bitcoin allows you to be your own bank, AND send your money to other people without a bank. Basically, it’s virtual cash.
Bitcoin was made as an anti-bank asset. On the first block, the “Genesis block”(don’t worry about the minutia of how it works, if you want to get in the thick of how Bitcoin works, check out this video), the creator “mined” the first block and referenced The Times front page article, “Chancellor on Brink on Second Bailout to Banks”.
In our global banking system, the people always loose. If we played a game of Monopoly, and every single time you played you lost, ad naseum…and later learned the game is literally rigged against you, any logical person would seize to play the game.
“Strange game, the only winning move is not to play”
Bitcoin is just a choice of not playing the banker’s game any more.
I’m not sure which reckless and stupid decision will be the cause of the banking system to become insolvent. It could be the $173 TRILLION (9 times bigger than the United States’ annual GDP) in derivatives they have made (derivatives is just a fancy word for betting on the markets with loans). Or the announcement that banks no longer have to keep cash in the bank. It could be the beginning of devaluing our dollar even more with the start of Quantitative Easing. Honestly, who knows “what” will cause the bank’s insolvency — all we know is history shows, it’s coming, and the bank will never go broke (at your expense).
When the banks go insolvent this round, they’ll likely take from Cyprus’ playbook and initiate bail-ins — which is fancy talk for taking your cash and giving you shares of a bank that’s facing “foreclosure”. You can’t buy groceries with bank shares. And when the bank finally does open back up and people line up for limited cash withdraws, what do you think will happen then? Look what we’re already doing over toilet paper!
So take measures to stop playing the game. Don’t get looted when the bankers start eyeing your stash. Maybe preserve your wealth by purchasing precious metals. Take out a few months of cash in case the bank bail-ins cause “banking holidays” for extended periods of time. Buy bitcoin.
In following posts, I’ll ‘defend’ Bitcoin, and explain how it’s already been attacked by bankers (and withstood it). I’ll also outline why we should stop speculating on Bitcoin’s price action (you’ll never buy the bottom, I promise you) and instead use it for payment methods when USD becomes trash. We should also pull our Bitcoin off exchanges and physically hold it independently in lieu of holding it on fiat exchanges, and start becoming familiar with how to hold it independently and spend it independently.
If you enjoyed, consider “practicing” sending me Bitcoin!
Corey’s Bitcoin Address:
17mz2X1zxj4Uqj5GQdfwe1YV7HS1UkEuuG
