A very good question: where is your bank’s money?


Bruce Wilds makes a very cogent point about the whereabouts – and the safety – of our money and our wealth.  Are we sure we know where it is, and whether or not it’s safe there?

The ugly truth is that there are many places your wealth could vanish into and multitudes of ways it could seep away. Remember, wealth zips across borders at the click of a button and just because you deposit it with a local institution does not mean it stays in your community.

We witnessed how wealth could be “transferred away” decades ago during the savings and loan crisis when huge beautiful buildings were constructed in certain areas from wealth transferred in from other parts of the country. Needless to say when the dust settled the big winners were the areas with the new buildings and not those forced to pay for them when the loans used to build them went into default.

Today some market watchers claim that the stock market is being held at lofty levels while the smart money is rushing to the exits. Today tens of trillions of dollars are sitting in offshore banking accounts in places such as the Cayman Islands. Today government and businesses are borrowing hundreds of billions of dollars each year by issuing bonds some that will not return investor’s money for decades. Today homes, apartments, and buildings are being built, some poorly constructed, with loans guaranteed more or less by the American people. Today America’s national debt stands at over 28 trillion dollars and is rising. Today currencies such as the euro and yen are even more fundamentally flawed than the dollar. I could do this a bit longer but I suspect I’ve made the point.

We have all heard about how the Caymans have become a popular tax haven among the American elite and large multinational corporations. This is because there is no corporate or income tax on money earned outside of its territory. This has made the Caymans especially popular among hedge fund managers. I hate to blow a hole in the idea that you can safely tuck their money away in an offshore banking account, the reality is, we have no idea where all the money deposited in the Cayman Islands really is. Banks do not just sit on deposits and keep them safe, they loan them out.

We must never forget the world is full of crooks, evil politicians, greedy bankers, and that we have judicial systems that make true justice a rare commodity. Returning to the focus of this article, the thing that is important is what or how much wealth survives an economic crisis and in what form. That is because when that wealth comes out of hibernation it will soak up all the tangible assets on the planet. This will be the determining factor of whether we face inflation, deflation, or some crazy mix of the two. Remember it is the nature of those in charge to throw the masses under the bus when things go sideways.

The average person is foolish and silly if they expect to be protected when the next financial crisis hits. Those counting on a stimulus check for survival will someday most likely find it will not buy them diddly-squat. The shelves will be empty or the value of what they receive will simply not be enough. The economic landscape we face following such an event will without a doubt be shaped and depend on what wealth survives and how much vanishes following a tsunami of defaults and /or a monetization of debt where government debt disappears and inflation takes its place. A word to the wise should be sufficient and cause any person prudent or interested in protecting their wealth to consider the many ways wealth can vanish and that it can without a doubt happen to you.

There’s more at the link.

It’s precisely that concern that makes me keep our money in more than one place.  In the event of a banking crisis or some other emergency, we may lose some, but we should be able to access some as well.

  • Our family account is with a smaller local bank, not one of the national finance houses.  In the event of a systemic breakdown, it’s less likely to be taken down.
  • We also have a backup account with a credit union, which is a different sort of financial institution from a bank, and is (in theory at least) not subject to the same pressures.
  • We have a small family reserve of emergency cash which isn’t in a bank at all.  (Don’t rely on a bank safety deposit box for such cash reserves.  If the bank closes its doors, you won’t be able to get at either your accounts or your safety deposit box.)
  • We have a small investment in precious metals (mostly silver one-ounce coins such as the American Silver Eagle, Canadian Silver Maple Leaf and South African Silver Krugerrand).  It’s not much, but in a pinch we can sell them to get cash, or use them to buy goods from vendors who’ll accept them.

I highly recommend that you consider doing something along those lines with your own money.  The rich can hire experts to protect their wealth, but the rest of us have to do it ourselves.  In today’s economy, prudence and caution are watchwords we should all be observing.



  1. I second the need for cash on hand.

    Don't forget that even small local problems can keep you from funds elsewhere – for example, power or internet outages will shut down local banks (or the computers that run them). ATMs have the same issues, plus they have a regular schedule to be restocked by armored car – if there are heavier than usual draws, they can run out of cash, or if the regular delivery is delayed.
    I've been in local stores at times that say Cash Only due to computer or card processor problems. I am astonished at the number of people who don't carry cash these days. Many don't even have change in their cars for unexpected small expenses like air compressors or tolls where the lack of change can stop them in their tracks.

  2. Fungible assets in the nearish future include: canned food, coffee, sugar, flour, salt, seeds, batteries, fertilizer, ammunition, reloading supplies…

  3. Perhaps this is going too far down the rabbit hole, but the only silver I buy is "junk" i.e. used US coinage. Given that there is a history of the Feds banning the possession of precious metals, as in FDR and gold, I think actual money is safest.

  4. Ferfal, a man who survived Argenina's troubles of two decades ago, recommended keeping on hand a supply of gold rings.

    The idea is, a man who spends a gold coin likely has more gold coins but a man who spends the ring off his finger has about nothing left.

  5. Ferfal knows of what he speaks here. My Grandparents have to give up their wedding rings to get past the German Transport Police of the Weimar Republic after Kristallnacht. If they had given some of their well hidden gold they would have been beaten and stripped of everything. The hidden gold paid for their passage to NYC where a well trained German Banker worked on the docks to re-establish his family and pay for other members to get out of the Pre-WW2 Germany.

    Remember well that the World was on a Gold Standard then so a gold Reichsmark or a gold British sovereign was just MONEY.

    Today it's NOT MONEY per say. You cannot pay taxes and Wal-Mart doesn't accept .999 silver coins for their products. You have to find someone who values it enough to TRADE or SELL it for Dollars to buy and sell.

    Gold and Silver are a Store of Wealth highly resistant to the inflation of FUNNY MONEY as it simply costs MOAR Funny Money to buy that same ounce of .999

    Also remember that Congress already has "Civil Forfeiture" where they can LEGALLY STEAL your stuff and make YOU PROVE you were not doing something Illegal and "Excess Profits" Taxes in their Toolbox to "Collect" what they NEED for their Needs.

    Disinformation helps, they cannot steal what they know nothing about. Know that Karen's LOVE to "See something, SAY something" so be quiet.

  6. A safety deposit box is useful for storing one of the copies of your important documents. It's not useful for storing the only copy of a document, or storing anything of special value, because generally the bank in question has no responsibility to protect the value of the contents. One of the big names (I forget which) bought a bank which bought a bank which bought a bank. They lost track of who owned a drawer full of one-of-a-kind watches, and took the contents to a storage facility. Several watches took a walk. The bank then said Too Bad, Too Sad. (This is why non-bank depositories, vaults, etc. exist.)

    I also emphasized one of the copies because one of the witnesses to our will was a lawyer as well. He had an older client who died, and the signed original of his will was in a safety deposit box the bank wouldn't open because no one but the man was listed on the box.

  7. It is very hard to operate without debit/credit cards and a checking account. I've used credit unions for years. Not perfect, but a notch or two safer than a bank.

  8. look at greece a few years ago. bank "holiday", opened only after people were starving. only allowed 50 bucks a day per account. lines measured in hours, still ran out of money some days. soon 50 bucks wouldn't buy food for the day, but the eu stepped in with "loans" b/c they didn't want a tidal wave of hungry greeks on their doorstep. the eu won't save us.

  9. Cash is trash.

    Stockpile money, not cash.

    My 401K, like Social Security, is a polite fiction of what I hope may someday be there when I need it.

    But my retirement nest egg is a stash of "junk" silver, and gold coins, along with land, food, tools, and the means to protect and secure them all.

    Paper fiatbux aren't money; it's just finely engraved firestarter and toilet paper.

    Ask Weimar, Argentina, Zimbabwe, Venezuela, etc.

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