03/04/2016 - Mitigating Risks Of A Bank Bailin
Sovereign Man highlights the trend to negative interest rates across the indebted western world, what to do to mitigate the risks from bank bailins .. “U.S. rates right now are just 0.25%. So even with a tiny cut the Fed is almost guaranteed to take interest rates into negative territory in the next recession .. We can see the effects of this in Europe and Japan where negative interest rates already exist .. Negative interest rates destroy banks. They eat into bank profits and force them to hold money losing toxic assets. Bank balance sheets become riskier, and people start trying to withdraw their money as a result. In Japan (which just recently made interest rates negative), one of the fastest selling items is home safes, which people are buying in order to hold physical cash. In Europe (where negative interest rates have existed for a while longer), bank controls have already been put in place to prevent people from withdrawing too much of their own money out of the banking system. This is a form of capital controls– a tool that desperate governments use to trap your savings within a failed system and steal your prosperity. Wherever you see negative interest rates you are bound to see capital controls close behind. One of the easiest things you can do is withdraw some physical cash out of the banking system.”
