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June 18, 2023 | They’re Coming For Your Bank Account

John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.

Two trends are converging to end the era of local bank accounts:

  1. Central banks are conspiring to force us out of traditional savings and checking accounts and into central bank digital currencies (CBDCs).
  2. Deposits are now fleeing local and regional banks because an inverted yield curve makes it impossible for those banks to pay competitive interest rates on deposits. Put another way, there’s a shortage of dollars in the banking system, which is an existential threat for a lot of banks.

Combine those two things and the result is a looming bank crisis that creates the perfect pretext for the forced introduction of CBDCs.

It will begin with more Silicon Valley Bank-style failures, leading the government to “protect” the banks by limiting depositors’ ability to pull their money out. This in turn will make banks even less attractive to depositors, leading to an acceleration of withdrawals and a surge in bank failures. Which gives the Fed its pretext.

Here’s a video of economist Peter St Onge explaining the process in a little more detail:

And here’s the article St Onge references in which hedge fund manager Hugh Hendry recommends that we panic:

Pulling Cash From Banks? Money Expert Lays Out His ‘Panic’ Scenario

Following the failures of Silicon Valley Bank, Signature Bank and First Republic Bank, Americans are understandably worried about bank stability and whether or not it’s dangerous to trust banks with their money. According to hedge fund guru Hugh Hendry, investors have every right to be in panic mode.

Hendry, Eclectica Asset Management founder, luxury property manager and in-demand financial commentator, fears that the flood of investors pulling from the M2 supply of money — cash, checking deposits and other types of deposits that are readily convertible to cash such as CDs — may eventually force the government and Federal Reserve to consider placing withdrawal sanctions on Americans. “I would recommend you panic,” he said.

“That could reach a crescendo where the Treasury and the Fed may have to come in and actually restrict your right as a U.S. citizen to pull money out of the U.S. banking sector,” said Hendry on Bloomberg Markets.

As we have been reminded of repeatedly during this current bank failure crisis, up to $250,000 per depositor is safe at financial institutions that are Federal Deposit Insurance Corporation (FDIC)- or National Credit Union Administration (NCUA) insured. This is true whether the bank or credit union is national, regional or local.

Make Your Money Work for You
But desperate times call for desperate measures, and Hendry likens the current scenario to the Gold Reserve Act of 1934, a government program aimed at boosting the faltering U.S. economy through restricting the private use of gold.

Suggesting the Fed and Treasury resort to placing a “lock” or “gate” on banking deposits, Hendry stated, “I can actually conceive of a Federal or Treasury rule coming in, saying, ‘For the next 180 days, you can’t pull your money out of the banking sector.’”

We might want to get out ahead of this

If you’ve got a lot of money in, say, a zero-interest-rate checking account at a local bank, not only is that money earning you nothing but it’s apparently in danger of being frozen during the next (imminent?) banking crisis.

So you might want to move it to a more accessible place. You could, for instance, pull some of it out and simply start paying for things with cash, since cash earns pretty much the same zero return as a bank checking account. You could also, as millions of depositors are currently doing, move some cash into a money market fund where you’ll earn 5% or so while we see how all of this shakes out. Money market funds, though, aren’t immune to regulatory overreach and could also be frozen in a crisis.

You could move your money to a brokerage account and buy a short-term Treasury ETF or something similar, which currently yields in the 5% range. Though it’s not clear why brokers are that much safer than banks at a time when governments are trying to steal as much societal wealth as possible.

One certainty is that in a bank run/deposit freeze/CBDC forced adoption, money will pour out of the banking system — and out of the dollar generally — and into gold and silver, which at the moment can’t be forcibly converted to FedCoin.

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June 18th, 2023

Posted In: John Rubino Substack

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