Are Banks Safe?

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Are banks a safe place for money?

Is the Concept of Money in the Bank Obsolete?

Podcast Summary:

0:00-5:10 Introduction/Review of the Week’s Economic Calendar

5:10-8:48 Discussion of whether the Fed will take stock market levels into account as to whether they will continue the tapering of quantitative easing (QE) this week. Louis notes that if the “recovery” is based on rising stock and real estate prices, the Fed will want to protect those gains. Louis notes that the Fed wants to gain credibility by tapering and to show that they are not dependent on the whims of the stock market so that they will probably go ahead and do another small taper, noting that even at these levels the current QE program represents a massive expansion of the money supply.

8:48-12:00 discussion of the ten year note and mortgage interest rates.

12:00-14:04 discussion of the relationship between the job market and the housing market.

14:05-17:40 what is the impact of financial data on the Fed’s decisions; discussion how the Fed manipulates the outcome that they wish; how the helps the banks and the U.S. government by keeping interest rates low but not the labor markets.

Are Banks Safe?

17:40-25:16 discussion of banks like Deutsche Bank and JP Morgan having financial issues and the story that HSBC’s policy of limiting large withdrawals without a proper explanation from its depositors; discussion of fractional reserve banking, negative interest rates and the safety of depositors’ money from confiscation by the bank and alternative places outside the banking system to hold assets; cold storage.

25:16-27:05 is the concept of “money in the bank” obsolete? FDIC; difference between retrieving your money from a bank and your property from a storage unit.

27:05-28:30 why people stay with large unresponsive banks.

28:30-30:40 discussion of depositor bailins and bank fees

30:40-34:20 discussion of the power and profitability of the too big to fail banks; executive compensation at the TBTF banks; Jamie’s Dimon’s bonus in spite of the large losses and write downs; running a bank with unlimited access to capital and political power.

34:20-39.27 discussion of alternative job skill training; public or private funding of job training, common core.

39:27-45:00 discussion of incentives and free market regulation vs. officious intermeddling that does more harm than good; difference between the U.S. standing in the world vs. twenty-thirty years ago.

45:00 questions for mortgage seekers to ask potential lenders.