What’s worse than being trapped in a failing bank?
How about being locked out of the banking system altogether…
John Rubino is sounding the alarm that bank weaknesses could lead to so called "friction" in getting your money out when you need it, citing Peter St Onge in this video.
Governments and banks are already demonstrating that they have the ability to arbitrarily lock up and lock in your money - and the Canadian truckers protest is a perfect example. The Canadian government trampled civil rights and due process to order banks to freeze customer accounts and the banks dutifully went along without a peep.
The US government has many of the same tools and the same ability. All it needs is a crisis.
Keep an eye on liquidity issues in the banking system especially. Interest rate hikes are causing cash crunches in many banks. But never fear, stress tests are here. On Wednesday the results of a Federal Reserve stress test on the banking system were released and - phew- you'll be glad to know that everything is just fine. Of course it is.
But is it? A few key points -
- Only 23 major banks were tested
- Test criteria is continually adjusted and is very complicated.
- Commercial real estate is acknowledged in the report to be a problem. A big one.
- 80% of commercial real estate debt is held in smaller regional banks that were NOT tested
The banking system may not be as healthy as the Fed represents. Tellingly, even Credit Suisse "passed" its test. Maybe that tells you all you need to know about stress tests... (Credit Suisse collapsed earlier this year and was bought up by UBS)
If interest rate hikes continue, we should see a real life stress test. When and if banks get desperate, what will they do to stay afloat?
Locked OUT of banking?
In the EU, they are doing the opposite to so-called "politically exposed persons" PEPs and unbanking them altogether. See this video from Nigel Farage on what is happening to him. He mentions his bank is closing his accounts. He's approached 6 or 7 other banks and has been refused accounts there as well. Without a bank account, which you do not have a constitutional right to, you become almost a non-entity in today’s society. Life becomes very difficult. How do you pay bills? How to pay the mortgage? He also points out that what they can do to him, they can do to you.
The EU has often become a harbinger of things to come here, so be on the lookout. It CAN happen here, if we are not vigilant.
So which is worse? Being locked into or out of the banking system?
In either scenario, having a little physical gold stashed away within arm's reach would be comforting, don't you think?