Remember back in 2008 when......

Feel free to post your economic, business and political news, reports, and predictions concerning the U.S., Canadian, and world economy here. Please keep threads and posts on-topic.

Remember back in 2008 when......

Postby Copper Catcher » Sun Jul 26, 2015 2:29 pm

You may or may not remember this back in 2008….This was a rare moment of truth was divulged by a member of Congress in an interview on C-Span.

If you look at the video i.e. 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. https://www.youtube.com/watch?v=Vh0vQAdZhuc

Here is a transcript of what Kanjorski says in the video:

"On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.

Money was being removed electronically.

The treasury tried to help with $150 Billion.

But could not stem the tide.

It was an electronic run on the banks

The treasury intervened but had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours. $5.5 Trillion would have been withdrawn and collapsed and within 24 hours the world economy."


Ok, with that in mind fast forward to today and as you read this article from Zero Hedge...More and more institutions are trying to make it harder for you to move your money into cash.


Globally, over $5 trillion in debt currently have negative yields in nominal terms, meaning the bond literally has a negative yield when it trades. In the simplest of terms this means that investors are PAYING to own these bonds.

Bonds are not unique in this regard. Switzerland, Denmark and other countries are now charging deposits at their banks. In France and Italy, you are not allowed to make cash transactions above €1,000.

This sounds laughable to most people, but it is a reality in Europe… and in the US, in some regions. Louisiana has made it illegal to purchase second hand goods using cash.

This is just the beginning. The War on Cash will be spreading in the coming weeks.

The reasoning is simple. Most large financial entities are insolvent. As a result, if a significant amount of digital money is converted into actual physical cash, the firm would very quickly implode.

This is precisely what happened in 2008…

When the 2008 Crisis hit, one of the biggest problems for the Central Banks was to stop investors from fleeing digital wealth for the comfort of physical cash. Indeed, the actual “thing” that almost caused the financial system to collapse was when depositors attempted to pull $500 billion out of money market funds.

A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).

This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.

To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.

When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.

None of these issues have been resolved. The big banks remain as leveraged as ever and at risk of implosion should a significant percentage of capital get pulled into physical cash.

European banks as a whole are leveraged at 26 to 1. In simple terms, this means they have just €1 in capital for every €26 in assets (bought via borrowed money).

This is why whenever things get messy in Europe, the ECB and EU begin implementing capital controls.

Consider what recently happened in Greece. Depositors began to flee the banks in droves, so they declared a bank holiday. This holiday included safe deposit boxes… so all the bullion or physical cash Greeks had stashed there remained locked up… just like the “digital” money in their savings accounts.

Again, it was impossible to get cash out of the banks… even cash that technically wasn’t “in the system” anymore but sitting in safe deposit banks.

The US financial system isn’t any better. Indeed, the vast majority of it is in digital money. Actual currency is just a little over $1.36 trillion. Bank accounts are $10 trillion. Stocks are $20 trillion and Bonds are $38 trillion. And at the top of the heap are the derivatives markets, which are over $220 TRILLION.

If you think the banks aren’t terrified of what this market could do to them, consider that JP Morgan managed to get Congress to put the US taxpayer on the hook for it derivatives trades.

Mind you, this is the same bank that is now refusing to let clients store cash in safe deposit boxes.

This is just the tip of the iceberg. As anyone can tell you, it’s all but impossible to move large amounts of money into cash in the US. Even the large banks will routinely ask you for 24 hours notice if you need $10,000 or more in cash. These are banks will TRLLLIONS of dollars worth of assets on their books.

Source: http://www.zerohedge.com/news/2015-07-2 ... n-war-cash

Now, my question to everyone is this:

If the total global credit system collapses overnight or during the day, then sooner rather than later all credit ceases to exist and you will no longer have access to the money in your bank account. Even if you did you are considered an unsecured creditor and the cash is not yours it is the banks. So whatever cash you have on hand will be it. Period, end of story.

Now consider this: Nearly eight in 10 Americans carry less than $50 cash and two out of five carry less than $20 cash on a daily basis, according to a new report by Bankrate.com. Additionally, about 9% of consumers surveyed say they don’t carry cash at all. http://consumerist.com/2014/05/12/study ... n-50-cash/

It is going to get ugly rather fast don't you think? How fast will things unravel; 24 hours or 48 hours, maybe in a week? What are you going to do when your neighbors comes knocking at your door looking for help?
User avatar
Copper Catcher
Too Busy Posting to Hoard Anything Else
 
Posts: 5206
Joined: Sat Jan 26, 2008 3:00 pm

Re: Remember back in 2008 when......

Postby slickeast » Sun Jul 26, 2015 3:37 pm

How are you supposed to buy second hand goods. Like yard sales, flea markets, etc?

Buy a BFS ( Big F..... Safe ) and bolt it down somewhere. Store cash in it. Find creative places to store cash. That way if you are robbed they won't get it all.


Remember. ...If you don't hold it, you don't own it.
You don't have to be the BEST you just have to be....... SLICK
User avatar
slickeast
Too Busy Posting to Hoard Anything Else
 
Posts: 6042
Joined: Thu Jan 08, 2009 3:00 pm
Location: South Carolina

Re: Remember back in 2008 when......

Postby Copper Catcher » Sun Jul 26, 2015 6:55 pm

I'm not sure what the answer is.....But, I was hoping with the collective wisdom of the board we could all figure this one out before it is too late. :shock:
User avatar
Copper Catcher
Too Busy Posting to Hoard Anything Else
 
Posts: 5206
Joined: Sat Jan 26, 2008 3:00 pm

Re: Remember back in 2008 when......

Postby 68Camaro » Sun Jul 26, 2015 7:00 pm

Have a fair amount of cash as well as everything else...
In the game of Woke, the goal posts can be moved at any moment, the penalties will apply retroactively and claims of fairness will always lose out to the perpetual right to claim offense.... Bret Stephens
The further a society drifts from the truth, the more it will hate those that speak it. George Orwell.
We can ignore reality, but we cannot ignore the consequences of ignoring reality. Ayn Rand.
User avatar
68Camaro
Too Busy Posting to Hoard Anything Else
 
Posts: 8195
Joined: Thu Dec 30, 2010 6:12 am
Location: Disney World

Re: Remember back in 2008 when......

Postby slickeast » Sun Jul 26, 2015 8:35 pm

Hey Rich, I think you should tell me......I mean us.....where you are hiding your stash. You know...in case something happens.
You don't have to be the BEST you just have to be....... SLICK
User avatar
slickeast
Too Busy Posting to Hoard Anything Else
 
Posts: 6042
Joined: Thu Jan 08, 2009 3:00 pm
Location: South Carolina

Re: Remember back in 2008 when......

Postby Recyclersteve » Sun Jul 26, 2015 10:09 pm

One cautionary note about safes... Be sure to get one that is fireproof (easy to find) and also waterproof (not nearly as easy).
Former stock broker w/ ~20 yrs. at one company. Spoke with 100k+ people and traded a lot (long, short, options, margin, extended hours, etc.).

Please note that ANY stocks I discuss, no matter how compelling, carry risk- sometimes substantial. If not prepared to buy it multiple times in modest amounts without going overboard (assuming nothing really wrong with the company), you need to learn more about the market and managing risk. Also, please research covered calls (options) as well.
Recyclersteve
Too Busy Posting to Hoard Anything Else
 
Posts: 4391
Joined: Sun Jan 20, 2013 5:59 am
Location: Where I Want To Be

Re: Remember back in 2008 when......

Postby IdahoCopper » Mon Jul 27, 2015 7:48 am

Recyclersteve wrote:One cautionary note about safes... Be sure to get one that is fireproof (easy to find) and also waterproof (not nearly as easy).


Yeah, when they put out the fire, you don't want your birth certificate to get wet.
- - - -
User avatar
IdahoCopper
Post Hoarder
 
Posts: 2337
Joined: Sat Jan 16, 2010 3:00 pm

Re: Remember back in 2008 when......

Postby smalltimeopn » Wed Jul 29, 2015 5:37 pm

I have been slowly getting extra cash from the ATM over the last several months every visit. I do a lot of local day travel with my work so I visit the ATM at least once a week.

One of my co-workers said he had a safe w/in a safe (for fire protection).
User avatar
smalltimeopn
Penny Pincher Member
 
Posts: 157
Joined: Tue Jan 12, 2010 7:00 am
Location: SC

Re: Remember back in 2008 when......

Postby fansubs_ca » Thu Jul 30, 2015 1:46 am

IdahoCopper wrote:Yeah, when they put out the fire, you don't want your birth certificate to get wet.


Especially if you want to be president one day... ;)
User avatar
fansubs_ca
Penny Hoarding Member
 
Posts: 711
Joined: Mon Jul 11, 2011 2:47 am
Location: Winterpeg, Manisnowba

Re: Remember back in 2008 when......

Postby NHsorter » Thu Jul 30, 2015 7:31 am

Maybe in Canada you would still have to worry about having a birth certificate to be president.
“They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety” Benjamin Franklin
User avatar
NHsorter
Super Post Hoarder
 
Posts: 3286
Joined: Mon May 09, 2011 10:39 am
Location: Live Free or Die

Re: Remember back in 2008 when......

Postby Mossy » Thu Jul 30, 2015 1:22 pm

NHsorter wrote:Maybe in Canada you would still have to worry about having a birth certificate to be president.

Oh, you could always photoshop something.
Mossy
1000+ Penny Miser Member
 
Posts: 1764
Joined: Mon Feb 14, 2011 6:45 pm


Return to Economic & Business News, Reports, and Predictions

Who is online

Users browsing this forum: No registered users and 1 guest