The Shocking Truth Your Bank Hides From You

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( — August 14, 2014) Portland, OR — 

When President Roosevelt created the FDIC program in 1933, every citizen breathed a sigh of relief. They could trust that their money simply wouldn’t disappear again as it vanished in a flurry of bank failures during the great depression.

But is it all that safe?

Examine the following issues.

The Bank Doesn’t Really Have Your Money

Banks are allowed to do something called “fractional reserve banking”. Fractional reserve banking is a system that only a fraction of bank deposits are backed by actual cash-on-hand. In a nutshell, that means that they don’t actually have to hold your money in the bank. So for every $1 that the bank has on its books, it is allowed to lend out $9. In the U.S., if a bank has a total of $50 million of (a) customer’s deposits and (b) loans to borrowers on its books, it must have a total reserve of $1,648,000 [$1,038,000 + $610,000 (10% of $6,100,000)]. Don’t believe it? Check it out here.

Quantitative Easing

“Quantitative Easing” is when the Federal Reserve (what a misnomer) begins printing money and giving it to banks.

Can I have some?

The effective of this influx of greenbacks is that it devalues the existing funds and makes them worth less (or if you like, worthless). It is simply a function of supply and demand but it robs your buying power and makes your money unsafe in banks.

Regulations and Limits

Every day your bank can impose its own rules on your account. Things like daily withdrawal limits and international wire transfer fees.

But the government also requires banks to comply with a number of anti-money laundering laws which severely restrict your ability to use and move your own money? Things like the reporting requirements for all transactions over $10,000 USD, or reporting on a series of transactions which appear to be attempts to avoid the reporting requirement.

So if can’t use, withdraw or spend your money as you please, is it still yours?

Cyprus Bank Theft

In April 2013, Cyprus citizens learned that when their bank made bad lending decisions, up to half of their life savings simply evaporated. Cyprus banks experienced a crisis and the European Union (EU) refused to bail them out. So many people discovered that if they went to bed with $100,000 in the bank, there was only $60,000 when they awoke the next day. This “wealth tax” event was called a “bail in”.


But that can’t happen in the U.S., can it?

BAIL Ins are Good

The International Monetary Fund (IMF) stated that the Cyprus Model of “bailing in” the banks is a good model, and that it can only be implemented successfully if the people do not try and take their money out to avoid such a bail in. And the US Agrees. So expect more of Cyrus-style Bail Ins at your local branch.

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