Skip to comments.20 Reasons Why America's Next Bank Holiday Will Be a Nightmare
Posted on 06/13/2012 4:46:07 PM PDT by Kartographer
The world is on now on the brink of a global credit crisis that could be far worse than the tumultuous events of 2008. The ongoing sovereign debt crisis in the southern reaches of the Eurozone indicate that bank runs in the region will continue, and that more bank closure "holidays" will be declared. Under a bank holiday, virtually all deposits could be frozen and irredeemable for days, weeks, or even months. The key question is: Will this crisis spread to the rest of Europe and then even to the United States? I urge SurvivalBlog readers--particularly those in Europe--to be proactive, to stay "ahead of the power curve." While the Generally Dumb Public (GDP) wakes up some morning to hear news of a bank holiday, you will have long hence prepared yourself.
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If credit and debit cards were suddenly cut off I would expect things would quickly go as described in this article:
An event at my grocery store [An ATS member’s experience].
Article is also in my Preparedness Manual which can be download for free at:
Thanks for a ‘meal’ to chew on, K.
I owe you a call. Got busy in life.
“sovereign debt crisis”
This is a funny term. I assume it means the same thing as government or public debt. Why doesn’t the press prefer those more obvious and common terms? Perhaps because “sovereign” is old-timey and makes us think it’s some king’s debt, or something.
Jim Rawles is a great guy and knows whereof he writes. I used to work with him — salt of the earth.
The next bank holiday is July 4, three weeks away.
One of the first thing to open back up after a hurricane is the banks. The ATMs usually run out of cash very quickly.
I’ve seen bank tellers given a police escort so they could open the bank branch after a hurricane.
Of course that won’t help when the bank stays closed and the tellers don’t even know whats going on.
Another reason: activities of political regulators, the contemporary method of business and neighbor vs. neighbor competition. Let the slide continue, until all is clean.
Bank of America to Spend $50 Billion Fighting Global Warming; Got $45 Billion from Bailout
A few important add-ons.
To underwrite cardholder debt, the credit card companies issue bonds frequently, regarded as the second safest bonds after US Treasuries. However, they are absolutely dependent on these bond issues to function. Two years ago, one of these issues *failed*, and caused a semi-panic in the cc industry. They immediately canceled hundreds of thousands of inactive cards and reevaluated blocs of card holders (You are not an individual to them, just part of a bloc. If the bloc is canceled, everybody in it loses their card.)
It is estimated that if 3-5 of these bond issues fail in a row, it would shut down the credit card companies. And since millions of Americans “live a month behind” their credit cards, they would instantly be unable to pay their monthly debts, such as rent, food and fuel.
Importantly, this can happen parallel to, or independent of, bank holidays.
The other thing:
“At the tail end of a banking crisis—when the bank doors do re-open—the Federal Reserve will certainly have to crank up the printing presses. Even people that never had “mattress money” will want some. All this new cash will increase the velocity of money, locally. This will be inflationary, even at the same time that at the macro level, we will witness a huge dollar deflation.”
Not going to happen. Physical money is printed by the US Bureau of Engraving and Printing, which has only two printing offices for currency in the US, in Fort Worth and Washington, D.C. Normally they work at capacity, just to maintain enough physical money to support 5% of US daily retail trade.
Most of this is $1 bills, with proportionately less higher denominations. And most $100 bills are shipped overseas.
This means that we *cannot* print more money, nor can we print higher denomination money, for the simple reason that nobody could make change for it.
So a banking crisis might be precipitated by what is called a “paper run”. If a paper run happened, every branch bank in the US would run out of paper money in a few hours.
Even right now, bank branches have just minimal paper money on hand. If, for example, you want to cash a check for $500 in $5 bills, there is a good chance that they do not have enough $5 bills on hand to do so. Yes, things are that tight.
So if you intend to store up some mattress money, I heartily recommend you do not delay, withdrawing money over a period of time until you have a few thousand dollars in a safe place.
There is also a bizarre phenomenon called a “currency split”, in which for many reasons, virtual money in the bank is unavailable and unwanted. So while it is seen as fairly worthless, paper money and coin deflates terribly.
A nickle worth a dollar, who knows? If people absolutely *must* have cash, likely due to a panic, it could be worth its weight in gold, as it were.
This could be deliberate and political, as in the instance of a currency devaluation. Or, it could be forced by a natural or man-made disaster, from cyberattack upon the banking system itself to the power grid, a massive solar flare, etc.
The natural or at least external will likely be used as a pretext or cover for the man-made to deflect popular outrage, if it ever occurs, imho.
I just gave my brother-in-law a copy of Patriots for his birthday. He was tickled pink to get it. He is aware of JWR and his writings but hasn't had the chance to read them.
This will no doubt kick his preps into high gear.
I saw this happen during the Savings and Loan crisis in Rhode Island in the early 90’s. Summer of 91 I think. Anyway, the credit unions had a major embezzlement issue, and closed. People woke up that morning not able to access their accounts, and it lasted a while from what I remember.
Ever since I got my first “real” job, I’ve only kept bare minimum in checking account to cover bills. The rest is stashed cash on hand. Makes things easier.
Good food for thought.
Imagine going through a month or more without having access to your bank and your cash. Walk through the whole time in your mind.
I don't need much so that is almost a normal month for me. If my bills can't get paid then no one else's can either. I'll eat from the pantry and read some books.
Again, knowing that I have supplies tucked away brings me peace of mind.
Even now I avoid large crowds, nor do I travel any farther from home that is required. Most weekends I don't leave ‘the grove’ unless absolutely necessary.
In this area, I suspect there are more folks prepping than not. Folks just don't speak of it.
IMHO, the critical time will be during and just after the next elections. If Obama is defeated, the will be urban rioting. Count on it. If this comes to pass, I will just hunker down and wait for the dust to settle.