patrick.net

darlag says

When depositors lose confidence in a banking system they will pull their money out the system to find a safer place for it. That is called a run on the bank.

So far in the US, the only ones who have lost confidence in the banking system are those who don't have any money.
I feel safe already :)

Strategist says

So far in the US, the only ones who have lost confidence in the banking system are those who don't have any money.

Operative words.... "So far." The problems will be visited on the U.S. system soon enough. Complacency is one of the first indications of impending crisis. Your view is the mainstream view. But I am a contrarian:

"Extreme opinions, shared widely, constitute the single most reliable indicator of an impending change of direction for a market."

Almost everyone believes things are getting better. Almost no one believes 2008 can happen again.

Fasten your seat belt.

You are saying FDIC does not apply?

Their answer to everything inflate.

indigenous says

You are saying FDIC does not apply?

I am. I quote Prechter,

Don’t rely on any government’s bank-deposit “insurance.” The money available through the FDIC, for example, is enough to cover only a small fraction of U.S. bank deposits. Japan's government has proposed lowering the value of insured deposits; that could happen in any country. The whole idea of having other banks and taxpayers guarantee bank deposits is theft in the first place and thus morally wrong and thus ultimately practically wrong. Government sponsored deposit insurance has lulled depositors into a false sense of security. After the 1930s, when thousands of banks failed, depositors became properly wary of profligate banks. Today they don’t know or care what their bank officers are doing with their money because they think that the government insures their deposits. Deposit insurance will probably save accounts in the first few distressed banks, but if there is a system-wide money and credit implosion, this insurance won’t protect you.

darlag says

Strategist says

So far in the US, the only ones who have lost confidence in the banking system are those who don't have any money.

Operative words.... "So far." The problems will be visited on the U.S. system soon enough. Complacency is one of the first indications of impending crisis. Your view is the mainstream view. But I am a contrarian:

"Extreme opinions, shared widely, constitute the single most reliable indicator of an impending change of direction for a market."

Almost everyone believes things are getting better. Almost no one believes 2008 can happen again.

Fasten your seat belt.

2008 will happen, but a complete loss in the American banking system will never happen. It won't happen because we know how to prevent it. As Indigenous mentioned above "inflate"

darlag says

indigenous says

You are saying FDIC does not apply?

I am. I quote Prechter,

You can't use technical analysis in something so fundamental as confidence in the banking system.

What do the politicians care the reality is that it is just another form of inflation?

There is a lot noise from Austrians about the end of the world, but logic and statistics would indicate that it is more hype to get people to buy gold.

Real causes of the end of the world are few. The only real one that I see is when the boomers break the entitlement bank. The rest will be flesh wounds. The good news is the US will grow to 400+ million and the boomers are not followed by another medicare sucking group like the boomers. Other countries are an inverted pyramid in this regard e.g. China, Japan.

In the US, the Fed can create money out of thin air, and transfer digital credits to the banks. The banks can then transfer the digital credits to customers who want their deposits back. There is nothing real about it. A "run" is merely a challenge to arbitrary accounting rules, easily circumvented. This ain't George Bailey's world no mo.

Somebody here has it wrong... those that do not understand deflation are in for a rude awakening.

Strategist says

You can't use technical analysis in something so fundamental as confidence in the banking system.

Au contraire: The whole premise of Socionomic theory rests on the ability to so.

http://www.socionomics.net/

darlag says

Somebody here has it wrong... those that do not understand deflation are in for a rude awakening.

How so?

indigenous says

darlag says

Somebody here has it wrong... those that do not understand deflation are in for a rude awakening.

How so?

Because those who don't understand deflation view leverage and massive debt to be the key to wealth.

indigenous says

How so?

As a society, we have been conditioned since the late 70s or early 80s to believe the stock market and real estate are practical tools for wealth generation. They are not. They are speculative vehicles that go boom and bust. Our grand and great grandparents learned that lesson and tried to pass it on to us. We didn't listen. Greed and avarice were too strong a siren call. The bigger the boom, the bigger the bust. And we are sitting at the top of the biggest boom in economy history.

As an Austrian School advocate, you should know that production and savings are the only true paths to prosperity, neither of which the world is successfully accomplishing today. We are simply borrowing from futurity to accommodate our greedy spending habits. Most seem to believe futurity will simply pay it back for us, albeit grudgingly, and all will be well in the end. I contend our children will not pay it back, ever. The debt bubble is bursting and, despite the fact that Cheney says deficits don't matter, once the levee breaks no amount of government or quasi-government intervention is going to repair it.

Deflation is not something with which anyone alive today is familiar. My 90 year old mother was 5 when the 1929 stock market crashed. Even she doesn't really remember how the debt markets imploded and the resulting effect it had on prices and wages. Keynes didn't do us any favors by suggesting, rather convincingly, that governments can temporarily disobey the natural laws of economics and finance long enough to "fix" them when they break. Give the government control of the purse strings and they will never, ever, give it back. The credit bubble that exists today is the largest in the history of mankind. The 1929 credit bubble, although huge at the time, pales by comparison.

Governments always make matters worse. This time is no different.

I suggest reading my Anatomy of a Bubble:

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-reserve-and-the-u-s-congress-have-created-a-debt-crisis-of-historic-proportion/

Darlag

As you now you are preaching to the choir.

Deflation is a benefit unless you have debt.

The first 100 or so years this country had deflation no problem.

OTOH until the SHTF the Fed is going to run their put to the advantage of the investors. If the SHTF in 15 years that is a lot of profits to miss out on

Jesus, Greece, get out of the damn Euro already. Bulgaria, Romania, Hungary, etc. also.

Leverage the a weak Drachma to attract more tourists, make your shipping industry cheaper and a better value, etc. etc.