I am wondering if you have an opinion about the FDIC. Do you think it will prove worthless?
We have a lot of CDs at the moment so this concerns me.
Let's suppose the US banks bust and they can no longer redeem your CD’s. The Fed would just print more money to cover the losses. So you'd get your CD money back.
But you might have to wait awhile. FDR declared a “bank holiday” back in 1933. That could well happen again.
And of course you'll be repayed with inflation-devalued currency. But you won't lose your money.
Since the US can print $$ at will, there is almost no chance it will technically go bankrupt. The more realistic scenario is that it will hyperinflate, making your CD dollars nearly worthless.
Unfortunately, the Global Economy is so distored that I can see a scenario where (bank) interest rates are near zero, but inflation is 20+%.
If the interest on US Treasures ever goes above 5%, then the USG budget becomes unsustainable. That is what is happening in Europe to the PIIGS countries. The Fed’s #1 priority is keeping this from happening. Count on it.