question about money and banks

[sunshine2777]

How I wish I had paid attention more in economics. Maybe one of ya'll can explain this to me.

I talked to my husband about our money in our checking acct at the bank. He says it is FDIC insured. (Its Regions Bank). Regardless of what happens, collapse, bank going under, run on bank, etc......, it is insured and eventually we would be able to get to our money and get it back. Is that true?

I dont understand how that part of the system works and would appreciate some help understanding it. Thanks!

[BeNotAfraid]

The banks do not keep enough cash on hand to cover everyone. They have a small amount of cash on hand and invest or lend the rest. If the market crashes (and the mortgage mess, people defaulting) you can kiss your money bye bye. You might get some of it back but likely the majority would be tied up for years in litigation. Also, I can't remember the specific amount but the FDIC does not have to pay you back dollar for dollar.

I don't have time to lay it out or provide links right now, but someone will come along and explain it much better :)

[tygerkittn]

If the FDIC has to cover everyone, it will have to print the money to do it, making inflation MUCH MUCH worse.

[sunshine2777]

If the FDIC has to cover everyone, it will have to print the money to do it, making inflation MUCH MUCH worse.

I guess the real question is "will they" or "can they" cover everyone's money? :shocked

[Issachar]

It's 47 minutes long, but if you and your husband watch this video (http://video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt&total=126&start=0&num=10&so=0&type=search&plindex=0), it is a real eye opener.

Issachar

[Issachar]

I guess the real question is "will they" or "can they" cover everyone's money? Someone can correct this is not accurate, but I believe the limit of the FDIC is 80 billion. That is not enough to cover everyone. Not near enough.

Issachar

[I'm all 67X]

I guess the real question is "will they" or "can they" cover everyone's money? :shocked

If they can or will, the rate of hyperinflation due to the rampant printing will make it pointless. The money will hold very little value.

Cause and effect.

Jon or Rondaben or JDA- you would have a better grasp on this than me

[BeNotAfraid]

If they can or will, the rate of hyperinflation due to the rampant printing will make it pointless. The money will hold very little value.

Cause and effect.

Jon or Rondaben or JDA- you would have a better grasp on this than me

Exactly. People will be crying to the government that they WANT THEIR MONEY!! The government will have no choice but to "give" it to them in the form of printing more dollars. This would still take some time so that even if you could access money once printing started it would still be rationed. The average Joe will not understand the problems this will cause. When hyperinflation starts because of it, they will just think that prices are going up as opposed to the value of the dollar in their hand going down. The FDIC holds true to their promise and the government looks like they have it all under control while the media will look for scapegoats to explain the "rising prices".

I don't think the powers that be have the will to say "no" to printing more money. If they did that it would bring about deflation and **probably?** massive riots or even civil war much quicker than we will see with hyperinflation. In a hyperinflation scenario we blame the middle east, big oil, wal mart, evil corporations, natural disasters...In a deflation scenario we blame the government and banks. Me thinks they opt for Door Number 1.

[deanne53]

FDIC has up to 99 years to pay back that money, this was told by a banker when asked when opening a new account at that bank.

[dramama]

If I were to pull my money out of the bank in cash, how much time should I give them to get the cash...How much do they have on hand? Lets say I had 50k in a CD (which I don't, it's just a nice round figure), how many days ahead of time should I give them to gather up the cash money???