small banks

SMALL BANKS
After staring off into space for ten minutes, I figured I better put down some drivel or I would be facing angry mobs of loyal minions carrying torches and pitchforks. For lack of anything interesting to talk about today, let's discuss small banks. Yes, they are failing left and right. Eventually, so will large banks. But this time, we won't see anyone's money disappearing with his bank. This time around, you get all of your money back. The only problem with that is that the money won't be worth squat. Just like your retirement. Even if your state goes bankrupt, the federal government will step in and take over the payments. With Monopoly money of course. Today the danger is not losing your money, it actually getting it.
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I'm sure we all know that hyper inflation is coming. Perhaps we feel it won't come fast enough to effect us. That we can prepare in time. It certainly doesn't seem that anyone is acting too worried. But even the small amount of inflation we've had is noticeable. Gas at twice the price. Basic food stuffs twice the cost. Wages flat to falling. And already, as the media talks about billions and trillions, no one bats an eye. So banks are the least of our problems. I actually think that the string of bank failures is an extension of TARP. The only reason the banks are showing a profit ( to get the last of the suckers to buy their stock ) is from the bailout money and the freeze on credit. Since the TARP money is already spent, the only other way to keep the free money coming in is through the FDIC. A small bank fails, the FDIC steps in and buys all the toxic debt with tax dollars ( which I don't concern myself with since there will never be enough taxpayer money to ever pay all this slop off-it will be paid by the printing presses ) and a larger bank throws in a little cash to make it look good. I doubt they spent more than what they can squeeze out of it. It is a fire sale.
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You might be wondering why you should even keep money in the bank at all. I look at it like the best of the worse choices. You are going to lose some of your money. The game is to try to lose the least amount possible. If you only use cash or a pre-paid debit card, folks will know you have cash at home. An invitation to theft. Yes, a safe is a good idea but only if you have enough valuables to pay for that cost. If you leave the money in the bank I doubt it will ever evaporate into a black hole. You'll be compensated in less valuable Greenbacks. Once all the banks go under you have more to worry about than paper money. Then the only thing that matters will be how many cans of Spam or rounds of ammo you have. Myself, I worry more about robbery than bank insolvency. So I keep my account full of my slush fund. $500 for a years extra expenses such as car insurance and gifts for the kids, and $500 for my rainy day fund. It might hurt eventually losing that, but I have plenty of Spam and ammo I'm more worried about.
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Inflation sucks, but you can't really negate all of its effects. You only have so much storage space for food, and converting to gold is both dangerous and impractical. It has a theft problem and a market fluctuation that does not work well for short term use. Gold is a long term wealth storage medium, not a way to pay bills short term. So you are just going to have to suck it up a bit with rising prices. In the end, we are all back to using barter. In the mean time, you accept smaller packages for more money. I could get into all that, but that might make another article one day. For now, here is your good news for the month. I love to throw bad news your way as fast as I can. But I guess I have to be nice once in awhile. So I'm throwing you a bone. I think bank failures are at the bottom of the list of things we need to worry about right now. With the understanding that when your bank does fail there is still the possibility you won't get paid back immediately. There might be delays if another bank doesn't step in as a buyer immediately. So plan accordingly around that.
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But basically, worry about the money losing purchasing power, not the money disappearing.
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