During the 2024 presidential race, Donald Trump repeatedly claimed that the U.S. economy was terrible under then-President Joe Biden and then-Vice President Kamala Harris. But according to U.S. Bureau of Labor Statistics (BLS) figures, unemployment stayed under 4.0 percent from February 2022 through...
People know that banks engage in all sorts of complex, stupid, and risky financial derivatives engineering. The only reason anyone has confidence in the banks is due to FDIC insurance. If they fuck with that, it will trigger a run on every bank in the country. I imagine Congress would step in to stabilize things, but it could be quite hairy for awhile.
Honestly, right now, for those who are able, keeping a decent chunk of cash in your mattress is no longer the game of cranks and weirdos.
Most people have no idea what FDIC is. They have confidence in banks because “that’s where you put money”. They have no concept of what their personal bank failing would mean.
If Musk said he was shutting down the FDIC, the vast majority of people wouldn’t care until after their bank failed. By then it would be too late.
I agree that most people have no idea what the FDIC does currently. But if the FDIC did disappear, people would be educated very quickly. When I say “people,” I mean enough people are currently aware of it that the FDIC’s disappearance would immediately trigger a complete bank run on every bank in the country. And if the FDIC did dissolve, you can be sure that the media would be breathlessly reporting on what a catastrophe it is. That alone would trigger mass bank runs.
And I would push back on the idea that there is nothing that could be done, that it would be too late. At that point, I imagine Congress would step in. They would reestablish the FDIC and restabilize the banking system. They could simply say that all bank deposits are going to be retroactively protected, and that the Federal Reserve will print whatever money is necessary to make people whole again. That could be done. And enough wealthy and powerful people would be screaming at Congress to do this, that I think even the Republican Congress would do it. I don’t trust Congress to do what is needed to protect the poor. I do trust them to do what is needed to save their own hides. I don’t trust a Republican Congress to prevent a bank from screwing me over with sketchy fees. I do trust a Republican Congress to act when their own life savings are being wiped out.
Thus I don’t think people need to a prep for a complete and permanent collapse of the banking system. I’m recommending more that people, if they are able, to have enough currency to buy food for the few months it might take for Congress to restabilize the system and for Musk to be tied to a boulder and thrown into the ocean.
As someone who does IT audits for banks in Puerto for FDIC audits, this is scary. The banks will embezzle, but they’ll also get hacked so we won’t know where the money went.
This makes me think twice about having a bank account at all.
Another smart idea is moving cash out of the dollar.
I’m personally not too worried about a complete collapse of the dollar. People like to pretend that the dollar isn’t backed by anything simply because it isn’t exchangeable for gold. But it is backed by something. It’s backed by the combined economic output of 330 million people, the largest or second largest economy in the world (depending how you measure), the most powerful military in the history of the world, and a terrifying arsenal of 5,000 thermonuclear nuclear warheads. Ultimately THAT is what the dollar is backed by.
You could collapse the banking system and wipe out everyone’s savings, but the fundamental foundations of the value of the US currency would still be there. The military would still exist. The vast resources, infrastructure, and human resources of the populace would still exist, etc. I personally do not think it likely that the currency will simply disappear. I’m more concerned about a mass bank run scenario than money literally becoming worthless. If anything, such a crisis would likely be deflationary rather than inflationary. It’s possible the value of American dollars would actually soar in that scenario.
But if you do want a hedge against complete currency failure, I understand. But I would be specific about what “out of the dollar” really means. It doesn’t mean gold or bitcoin. Bitcoin and other crypto is already a huge bubble, and it’s propped up by the same clique of tech bastards that risk crashing our economy right now. If the tech bros crash the banking system, going into a store and trying to pay for something in crypto is likely to see you lynched.
As for gold? Actually paying for things in gold in a crisis is a right-wing prepper fantasy. An amount of gold equal in mass to a penny is worth about $250. It’s just too valuable per gram to be usable as a currency. In ye olden days, they did use gold as a currency in some times and places, but people had the infrastructure to handle it. How many stores have you been in recently that have fine milligram scales at their checkout counters? Do you have the tools to handle small quantities of gold dust? Gold may be useful as an investment vehicle to whether a crisis. But in terms of actually buying the essentials of life during an economic crisis, it’s useless.
If you’re worried about the dollar itself collapsing, look at what’s happened in countries that actually have had their currencies collapse. Look at countries like Zimbabwe. When currencies collapse, people don’t start using gold or other precious metals. They tend to just switch to other currencies that haven’t collapsed. People in Zimbabwe didn’t switch to gold. They instead started using American dollars, Euros, and the currencies of adjacent countries.
If you’re in the US and worried about dollars themselves becoming worthless, you should keep a stockpile of Canadian dollars, Mexican pesos, Euros, Chinese Yuan, etc. I think Canadian dollars and Euros would probably be the the currencies that people would most likely accept in the event of a complete collapse of the US dollar.
I’m sorry, but I don’t know. I wish I could offer better advice. But really the best advice I can give is to get in touch with or start forming local mutual aid groups. I realize being able to keep say, $1k in cash in your house somewhere is not an easy lift for a large portion of the populace. And I don’t mean to trivialize the difficulty of that.
But also, this is a “put on your own oxygen mask first” situation. If we do have some sort of catastrophic banking collapse, those with resources will be more able to help others if they’re not drowning themselves.
Besides mutual aid, you might focus on building up a stockpile of dry goods or vital medicines. I think (perhaps too optimistically), that a complete collapse of the banking system would be one of the few things that would finally get even the Republican Congress to get off their ass and start passing some emergency legislation. I would hope that part of that emergency legislation would be rent and eviction freezes, bans on penalties for missed rent and mortgage payments, and actions to reestablish the FDIC and restabilize the banking system.
I think most politicians are self-serving shameless wealth and power chasers. And for Musk/Trump, if they had an ounce of brains between them, the one rule would be “don’t fuck with the money.” If even Republican Congress members are seeing their life savings wiped out, then that’s one of the few cases I could see them actually standing up to the orange bastard. If that happens, if DOGE manages to crash the banking system, Musk will be lucky if he doesn’t end up a bloody stain on a wall somewhere. He’s risking seriously pissing some very wealthy, very powerful people that you really do not want to fuck with. Some very evil amoral people who have no problem against even murder.
So I think if there was a major crisis in the banking system, I think eventually things would be stabilized. But in the meantime, I think what people should do is be prepared to survive for a few turbulent weeks or months. That could mean a reserve of physical cash, a stockpile of dry goods, a mutual aid network, etc. I don’t think it’s reasonable for any but the most wealthy to seriously plan for a complete and permanent collapse of the banking system. But it is within the power of most people to at least plan for a few turbulent months. That’s obviously easier if you’re not living paycheck-to-paycheck. But even if you are, there’s quite a lot a few dozen people working together can accomplish if they are able to help each other out when a crisis arrives.
Wait til these idiots try to abolish the FDIC.
People know that banks engage in all sorts of complex, stupid, and risky financial derivatives engineering. The only reason anyone has confidence in the banks is due to FDIC insurance. If they fuck with that, it will trigger a run on every bank in the country. I imagine Congress would step in to stabilize things, but it could be quite hairy for awhile.
Honestly, right now, for those who are able, keeping a decent chunk of cash in your mattress is no longer the game of cranks and weirdos.
Most people have no idea what FDIC is. They have confidence in banks because “that’s where you put money”. They have no concept of what their personal bank failing would mean.
If Musk said he was shutting down the FDIC, the vast majority of people wouldn’t care until after their bank failed. By then it would be too late.
I agree that most people have no idea what the FDIC does currently. But if the FDIC did disappear, people would be educated very quickly. When I say “people,” I mean enough people are currently aware of it that the FDIC’s disappearance would immediately trigger a complete bank run on every bank in the country. And if the FDIC did dissolve, you can be sure that the media would be breathlessly reporting on what a catastrophe it is. That alone would trigger mass bank runs.
And I would push back on the idea that there is nothing that could be done, that it would be too late. At that point, I imagine Congress would step in. They would reestablish the FDIC and restabilize the banking system. They could simply say that all bank deposits are going to be retroactively protected, and that the Federal Reserve will print whatever money is necessary to make people whole again. That could be done. And enough wealthy and powerful people would be screaming at Congress to do this, that I think even the Republican Congress would do it. I don’t trust Congress to do what is needed to protect the poor. I do trust them to do what is needed to save their own hides. I don’t trust a Republican Congress to prevent a bank from screwing me over with sketchy fees. I do trust a Republican Congress to act when their own life savings are being wiped out.
Thus I don’t think people need to a prep for a complete and permanent collapse of the banking system. I’m recommending more that people, if they are able, to have enough currency to buy food for the few months it might take for Congress to restabilize the system and for Musk to be tied to a boulder and thrown into the ocean.
I assume you meant stabilize, but given that Congress is controlled by Republican freaks, I’m unsure.
You are correct on both counts!
This is extra dumb because the fdic is funded by insurance premiums paid by the banks. It literally costs taxpayers nothing
It’s only your money they’re playing with
As someone who does IT audits for banks in Puerto for FDIC audits, this is scary. The banks will embezzle, but they’ll also get hacked so we won’t know where the money went.
This makes me think twice about having a bank account at all.
Another smart idea is moving cash out of the dollar.
I’m personally not too worried about a complete collapse of the dollar. People like to pretend that the dollar isn’t backed by anything simply because it isn’t exchangeable for gold. But it is backed by something. It’s backed by the combined economic output of 330 million people, the largest or second largest economy in the world (depending how you measure), the most powerful military in the history of the world, and a terrifying arsenal of 5,000 thermonuclear nuclear warheads. Ultimately THAT is what the dollar is backed by.
You could collapse the banking system and wipe out everyone’s savings, but the fundamental foundations of the value of the US currency would still be there. The military would still exist. The vast resources, infrastructure, and human resources of the populace would still exist, etc. I personally do not think it likely that the currency will simply disappear. I’m more concerned about a mass bank run scenario than money literally becoming worthless. If anything, such a crisis would likely be deflationary rather than inflationary. It’s possible the value of American dollars would actually soar in that scenario.
But if you do want a hedge against complete currency failure, I understand. But I would be specific about what “out of the dollar” really means. It doesn’t mean gold or bitcoin. Bitcoin and other crypto is already a huge bubble, and it’s propped up by the same clique of tech bastards that risk crashing our economy right now. If the tech bros crash the banking system, going into a store and trying to pay for something in crypto is likely to see you lynched.
As for gold? Actually paying for things in gold in a crisis is a right-wing prepper fantasy. An amount of gold equal in mass to a penny is worth about $250. It’s just too valuable per gram to be usable as a currency. In ye olden days, they did use gold as a currency in some times and places, but people had the infrastructure to handle it. How many stores have you been in recently that have fine milligram scales at their checkout counters? Do you have the tools to handle small quantities of gold dust? Gold may be useful as an investment vehicle to whether a crisis. But in terms of actually buying the essentials of life during an economic crisis, it’s useless.
If you’re worried about the dollar itself collapsing, look at what’s happened in countries that actually have had their currencies collapse. Look at countries like Zimbabwe. When currencies collapse, people don’t start using gold or other precious metals. They tend to just switch to other currencies that haven’t collapsed. People in Zimbabwe didn’t switch to gold. They instead started using American dollars, Euros, and the currencies of adjacent countries.
If you’re in the US and worried about dollars themselves becoming worthless, you should keep a stockpile of Canadian dollars, Mexican pesos, Euros, Chinese Yuan, etc. I think Canadian dollars and Euros would probably be the the currencies that people would most likely accept in the event of a complete collapse of the US dollar.
Dollar stability is largely due to petroleum. If OPEC decides to start accepting Euros in payment, the dollar will lose strength quickly.
Add the Swiss Franc. I cannot recall if it ever croaked.
That’s only smart if the dollar doesn’t keep going up.
What should paycheck to paycheck people do (serious question)?
I’m sorry, but I don’t know. I wish I could offer better advice. But really the best advice I can give is to get in touch with or start forming local mutual aid groups. I realize being able to keep say, $1k in cash in your house somewhere is not an easy lift for a large portion of the populace. And I don’t mean to trivialize the difficulty of that.
But also, this is a “put on your own oxygen mask first” situation. If we do have some sort of catastrophic banking collapse, those with resources will be more able to help others if they’re not drowning themselves.
Besides mutual aid, you might focus on building up a stockpile of dry goods or vital medicines. I think (perhaps too optimistically), that a complete collapse of the banking system would be one of the few things that would finally get even the Republican Congress to get off their ass and start passing some emergency legislation. I would hope that part of that emergency legislation would be rent and eviction freezes, bans on penalties for missed rent and mortgage payments, and actions to reestablish the FDIC and restabilize the banking system.
I think most politicians are self-serving shameless wealth and power chasers. And for Musk/Trump, if they had an ounce of brains between them, the one rule would be “don’t fuck with the money.” If even Republican Congress members are seeing their life savings wiped out, then that’s one of the few cases I could see them actually standing up to the orange bastard. If that happens, if DOGE manages to crash the banking system, Musk will be lucky if he doesn’t end up a bloody stain on a wall somewhere. He’s risking seriously pissing some very wealthy, very powerful people that you really do not want to fuck with. Some very evil amoral people who have no problem against even murder.
So I think if there was a major crisis in the banking system, I think eventually things would be stabilized. But in the meantime, I think what people should do is be prepared to survive for a few turbulent weeks or months. That could mean a reserve of physical cash, a stockpile of dry goods, a mutual aid network, etc. I don’t think it’s reasonable for any but the most wealthy to seriously plan for a complete and permanent collapse of the banking system. But it is within the power of most people to at least plan for a few turbulent months. That’s obviously easier if you’re not living paycheck-to-paycheck. But even if you are, there’s quite a lot a few dozen people working together can accomplish if they are able to help each other out when a crisis arrives.