Possible Federal Reserve failure mentioned on CNBC

[sunshine2777]

In veeeeryy basic terms, people aren't expecting the Fed to "let" another investment bank fail. When it happens, it will likely cause a selling panic as everyone tries to jump ship and get what $ they can before everyone else does. Then folks at home hear this on the news and panic...they call their brokers to get their $$ out, freak out about their 401Ks/IRAs, run on their banks to withdraw money from checking and savings...

Thanks. Do you think the Feds would bail the bank out or are you thinking they'll let it go down and the ensuing chaos woud occurr? How long would all this take? I've gotten real uncomfortable with keeping our $ in the bank but no valid reason for pulling it out. I'm not talking about anything fancy, just checking accounts. Since I dont understand how it all works, I never know what to do on this kind of thing. Thanks for your help!

[Rondaben]

Thanks. Do you think the Feds would bail the bank out or are you thinking they'll let it go down and the ensuing chaos woud occurr? How long would all this take? I've gotten real uncomfortable with keeping our $ in the bank but no valid reason for pulling it out. I'm not talking about anything fancy, just checking accounts. Since I dont understand how it all works, I never know what to do on this kind of thing. Thanks for your help!

I have put several posts on this forum about this very thing.

The Fed has taken over 80 years to accumulate just under 900 billion in treasuries as a reserve for a rainy day.

Since the rain started coming down in earnest this spring they have used over half of that reserve to prevent commercial and investment bank failures. Their new lending facilities are pumping out amost 100 billion more each weak.

When it is gone, they will need to physically print more currency to buy new treasuries from the Government. That will be EXTREMELY inflationary. The dollar will enter a freefall. To counter this, the Fed will be forced to raise interest rates dramatically and with great frequency. Capital will dry up (it is already very tight because of hording by banks anxious about potential losses). After a period of large inflation, there will be a period of massive deflation. Prices of everything will fall. dramatically. Employement will collapse and we will enter a depressionary phase.

Here is one reason to pull your money out. The Federal banks have a cash depository reserve of 43 Billion on deposits of around 9 Trillion. That means that for every dollar in peoples checking, savings and money market, there is only around 1/2 of 1 cent on hand. When the failure comes and the rush for the bank happens that will go very, very quick. They will close the doors and limit withdrawals, just as they did in the depression and banking crisis in the early 20th century.

Non-Federal banks are not required to hold ANY cash in reserve.

I am expecting this to hit in the next 6-12 weeks. About the time an attack on Iran occurs to explain away skyrocketing commodities (i.e. Oil and Gold) a plummeting dollar and economic "warfare" on america that will be reported as coming from other countries, but belongs squarely at the door of the Fed and the US Treasury.

[Tammy]

Rondaben Wow 6 to 12 weeks that doesn't give us much time. For people that don't have gold and silver other then buying alot of extra food now. What can we do?

[dpetty]

If this comes to pass I am not sure paper money would be worth much, I had read a number of articles that brokers were worried they were seeing ghosts aka market trends that reminded them of the 30's and 70's, problem is this coming down turn may will over shadow either of the last 2 downturns.

[dpetty]

A few days ago on Glenn Beck's program he had a former Treasury offical and he recommended with all the coming events in the markets to buy lots of food, his words were stock up now.

[BeNotAfraid]

I have put several posts on this forum about this very thing.

The Fed has taken over 80 years to accumulate just under 900 billion in treasuries as a reserve for a rainy day.

Since the rain started coming down in earnest this spring they have used over half of that reserve to prevent commercial and investment bank failures. Their new lending facilities are pumping out amost 100 billion more each weak.

When it is gone, they will need to physically print more currency to buy new treasuries from the Government. That will be EXTREMELY inflationary. The dollar will enter a freefall. To counter this, the Fed will be forced to raise interest rates dramatically and with great frequency. Capital will dry up (it is already very tight because of hording by banks anxious about potential losses). After a period of large inflation, there will be a period of massive deflation. Prices of everything will fall. dramatically. Employement will collapse and we will enter a depressionary phase.

Here is one reason to pull your money out. The Federal banks have a cash depository reserve of 43 Billion on deposits of around 9 Trillion. That means that for every dollar in peoples checking, savings and money market, there is only around 1/2 of 1 cent on hand. When the failure comes and the rush for the bank happens that will go very, very quick. They will close the doors and limit withdrawals, just as they did in the depression and banking crisis in the early 20th century.

Non-Federal banks are not required to hold ANY cash in reserve.

I am expecting this to hit in the next 6-12 weeks. About the time an attack on Iran occurs to explain away skyrocketing commodities (i.e. Oil and Gold) a plummeting dollar and economic "warfare" on america that will be reported as coming from other countries, but belongs squarely at the door of the Fed and the US Treasury.


Yeah, what he said :)

Every payday we pay our bills online and then take everything else out in cash. We are military and so we have to get paid direct deposit--we don't have a choice. That's the best we can come up with. Hope that helps Sunshine.

I am having a difficult time wrapping my mind around hyperinflation vs deflation in our preps. On one hand $$ is going to be worth a LOT less in an inflation or hyperinflation scenario. In that case you would want to use it now to buy what will be more expensive later. On the other hand, if it is followed by deflation, you're going to need money on hand. I suppose the only way to really take care of both scenarios is to buy pms, but I can't afford gold and silver makes me nervous :idunno

[Maggie]

We have our accounts in a credit union. Are they the same then, as a bank as far as what will happen to the money in them?

[Rondaben]

Rondaben Wow 6 to 12 weeks that doesn't give us much time. For people that don't have gold and silver other then buying alot of extra food now. What can we do?

In a hyperinflationary scenario, goods that have trade value will be of use. Food, of course. Paid off assets are the next, real estate being most important of those. Other than that Precious metals are your best bet to retain monetary value. I prefer silver, because of its lower denominational value and because that historically it is very undervalued compared to gold right now.


I am having a difficult time wrapping my mind around hyperinflation vs deflation in our preps. On one hand $$ is going to be worth a LOT less in an inflation or hyperinflation scenario. In that case you would want to use it now to buy what will be more expensive later. On the other hand, if it is followed by deflation, you're going to need money on hand. I suppose the only way to really take care of both scenarios is to buy pms, but I can't afford gold and silver makes me nervous

Really, it isn't that clear cut as to how the Fed will push this. They currently are holding pat--that is inflationary with all of the stimulus that they are pushing out the back door through the auction facilities. If they were serious about inflation they would have raised rates yesterday, but that course would bring about a deflationary cycle first THEN followed by a hyperinflationary cycle. I have faith that the Fed will do their best to protect banks and investment brokerages at the expense of the average american, so more treasuries and inflation it is.

The best choice regardless of the scenario is PMs. You could buy gold in smaller amounts than 1 oz if you are able--perhaps 1/10 oz increments--that would be around $100 each. I chose silver for a couple of reasons---

1) historically silver trades at a rate of about 1/10th of gold. Given that, it should be closer to 80-90 dollars per oz right now (its 17 and change I believe). Relative to gold silver is CHEAP.

2) It is just as easy to convert and unlike gold, it is heavily used by industry in almost every product. Since it is typically destroyed (unable to be salvaged after it's use) it has an even higher value than gold as a true industrial commodity.

3) Finally, it is much smaller in denomination. It will be easier to trade 1 oz of pure silver for 50 pounds of silver than it will 1 oz of gold. There won't be change to speak of--you may just buy a very expensive sack of flour for your gold.

We have our accounts in a credit union. Are they the same then, as a bank as far as what will happen to the money in them?

Like a bank, they will be insured by FDIC or an equivalent. The problem is that it may take them up to 3 years to get you your money back. If inflation hits in earnest, that 10,000 in your account today may actually be enough to buy you a sandwich when you finally get your FDIC check.

General rule--in inflation, paid off assets and trade goods rule. In Deflation, Cash rules--assuming that cash is still worth anything.

[HSmomto4]

I'm not sure our government will cause or allow deflation though. We are preparing for hyperinflation, not just inflation. The whole purpose of this is to bring us to a one-world currency. Many countries are in inflation territory right now with hyperinflation worries on the rise. My guess is that we are just joining what is a well planned out world game.

[Rondaben]

I'm not sure our government will cause or allow deflation though. We are preparing for hyperinflation, not just inflation. The whole purpose of this is to bring us to a one-world currency. Many countries are in inflation territory right now with hyperinflation worries on the rise. My guess is that we are just joining what is a well planned out world game.

I agree completely. My feeling is that hyperinflation will happen. Still an outside possibility of deflation, but I'm doubting it.

I also feel you are right. In order to bring about a north american union with a common currency, they will have to devalue the dollar to nothing. US and, to a lesser degree canadian standards of living will have to come down, Mexico will come up and we will all be one big happy Amero family.