Should You take your money out of the bank?

19 October 2023

DISCLAIMER THIS IS NOT FINANCIAL ADVICE 

CONSULT A LICENCED FINANCIAL ADVISOR BEFORE TAKING ANY ACTION.

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” Ernest Hemingway

Under Australian law I cannot provide consumer level financial advice, ironic given I spent a lot of my working life employed giving investment advice to stock brokers and financial advisers. Also, I may add that most financial advisers do not have a clue what I am about to comment on, or what to do about it. That said there are a few good financial advisers… too few.

What you need to know

Bank BailIn

Firstly, bank bailin is real. 

It has already been tested in Cyprus 2012-13, and a recent court case in Europe reinforced that depositors had no right to the return of their money, which was measured in the billions of dollars. 

Bailin treats depositors as unsecured creditors to the bank and the bank can take your money. This legislation is in place globally, including Australia and the US. 

This money is in theory in part insured under various RBA/Treasury and US provisions, that conveniently fail to mention that in the event of a big enough deposit bailin the organisations running these smoke and mirror shows do not have the money required to insure deposits. 

Central banks would likely have to create the money, the value of which is likely to be inflated away by the time depositors actually got some of their money back. 

The more likely scenario is that in the event of a bailin, government and the banks would use the crisis to trick the people into accepting Central Bank Digital Currency (CBDC). See my articles on this under the CBDC heading.

My personal view is that banks defaulting in this interim period will be merged to avoid bailin, see UBS completes Credit Suisse acquisition until CBDC around the world is ready to go. Once CBDC is in position and ready to be triggered, they will let banks fail and bring down the world’s entire banking system.

This is why Western Australia needs to urgently outlaw CBDCs, Re-establish a state bank, and make physical and digital gold and silver coinage the primary currency mechanism in the state. 

Western Australia is well placed to do this if the politicians had a clue, which they do not.

Over the Counter (OTC) Derivatives exposure

The OTC Derivatives market is one of the most complex markets in the world. 

I will try to explain it with a hypothetical example. 

Bank A bets against bank B that interest rates rise in 30 days the bet is one trillion dollars, nether bank B or bank A has a trillion dollars, so each side of the bet offsets the position. 

Bank B offsets $500 billion with bank C, C offsets 200 billion with bank F, bank F offsets 50 billion with bank Y and so on, on both sides of the trade. 

Add up all these offsetting bets eg. $500 billion, plus $200 billion plus $50 billion and all the offsets on the other side and you get the Notional Value of this particular position or trade. 

“Derivative Notional amounts increased in the second quarter of 2023 by $4.3 trillion, or 2.0 percent, to $221.9 trillion.” 

However, the reality is the Notional amount is unknown, is multiple times the GDP value of the world, and even if a figure could be determined it would be wrong 30 seconds later.

Now this is important, banks say that with all the counterparty risk offsets on both sides the actual Value at risk (VaR) is low and manageable. 

Which should be obvious to anyone but politicians and bank regulators it seems, both of which are either incompetent or corrupt, possibly both. 

Should a counterparty in the chain default there is the potential for defaults to cascade through the entire system. 

For those who say this will never happen, it already did in 2008, when banks who know the real risk, stopped dealing with each other in the overnight money market. 

This froze the global financial system, which was only saved by the Governments of the world guaranteeing the overnight money market.

US federal debt was about $9.4 trillion in 2008 today it is over $33 trillion and on the verge of going out of control. 

Globally debt exceeds 300% of GDP.

Should the OTC Derivatives market collapse the banking system again, it is now questionable that the market would accept that even Governments could save the system. 

Some Governments could of course just create the money, though the quantity of which could potentially result in a Venezuela type outcome of hyperinflation, where some people ate the zoo animals to stay alive. 

There also appears to now be legislation that prevents governments being allowed to offer a system bailout, and bailin of your money would be the only option.

Australian bank risk is unquantifiable

Some Australian banks engaged in OTC derivatives do not accurately release their derivatives exposure. 

I wrote to "bank regulator" and I use the term loosely APRA about this and have so far received no reply. 

This means that risk in individual banks engaged in the derivatives market is unquantifiable. 

In short, most bank research analysis not stating this fact is a scam.

Is The Great Taking True?

The Great Taking is a book available for free online as a PDF, which suggests while no one was looking bank bailin has been greatly expanded globally to include most other debt assets and bank custodian collateral such as stocks, houses, equipment with any debt etc. 

And that banks are effectively using customer assets as collateral in the derivatives market.

I have read the book twice and while the background of the writer is difficult to find, who can blame him for keeping a low profile? 

On balance, I consider the book to be mostly true. 

Although there are the usual “conspiracy theory” comments from people who wouldn’t know the difference between a derivatives market and a vegetable market. 

What to do?

The obvious thing to do is to have regulatory agencies and politicians act to protect their constituents. 

However, once you understand what is actually going on in the world, most people will understand that the chance of this happening is extremely low. 

For a long while I considered that leaders in our society were just stupid. 

I do not hold this view any longer, even my pet chicken is not that stupid, my conclusion is we are facing pure evil by design.

Back when I was advising advisers I would commonly ask, “Does the client have any debt? 

If the answer was yes, I would say, “Tell the client to pay off all their debt, get a physical copy of their property titles away from the bank, this must be requested, and come back after that is done.”

Through history all fiat currency systems collapse. 

The US went off the gold standard in 1971, has now broken with the traditional concept that debt should broadly correlate with tax receipts, and is currently spending and printing its way to currency, bank and economic collapse.

I do not know if the system will collapse next week, or in 20 years. 

It will take far less evil people controlling the system than we have now to have any chance of avoiding a very negative outcome.

Only plant things that you can eat in your garden. 

Buy non-counterparty exposed assets for yourself and as gifts for people you love. 

Educate everyone you can. Most will not believe you. 

Ignore that, as the knowledge may just help them move forward when it all becomes too bad for even them to deny the obvious. 

Consider buying a big guard dog in Australia, and an automatic weapon in the US. 

Identify anyone associated with WEF, get far away from them, and if they are politicians such as Penny Wong or Clare O’Neil in Australia, under no circumstances vote for them or their party (Labor). 

State Labor are just puppets for Federal Labor. 

Know that this problem does not just reside in Labor, but Liberal and the Greens. 

Sen. Alex Antic and Malcolm Roberts both get what is going on, and are on the side of good.

Use this time to get out of debt, accumulate physical assets that do not hold much or any counterparty risk exposure, get as far away from the banking system as possible as the years go by. 

Yes I know this is easier said than done. 

There is a WA Government guaranteed asset available on the ASX, convertible to physical gold, which I hold. This may have lower counterparty risk but the issuer states, “We monitor bank risk through credit agencies” which in my mind translates as, “We don’t have a clue what is going on,” so I am reluctant to suggest the product here. DYOR and talk to a financial adviser before taking any action.

That should tell you all you need to know. 

If you are not yet convinced look how it is getting harder and harder to get access to cash. Pay no attention to what banks say, only pay attention to what they do.

Should you take your money out of the bank?

This depends very much on where you live, how much money you have exposed, do you have debt, how long could you live if all your money in the bank disappeared tomorrow, how can you extend this period? Remember councils will still want rates to be paid, There will still be electricity, water bills etc.

My own approach is to do one thing to protect myself and the people I love each day, no matter how small. 

And to educate other people, many will reject what you say, but commonly some people put two and two together eventually, a group of people who understand the risk could be a great force together. 

Again, I emphasize that I do not know if the collapse will come next week or in 20 years, but fiat has a 100% historical failure rate. And that’s a probability I want to protect against.

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Andrew Quin is a published author, Advisor to Financial Advisors, former Fund Manager, and Macro Economic Strategist and Pending(AEC application forms for independents for the 2025 State Election are not yet available) INDEPENDENT candidate for the South Perth election in 2025.

Andrew can be contacted via email andrewquin@outlook.com All correspondence should be considered in the public domain.

All information on this Website can be used with acknowledgement and a link to the website included.

Website: andrewquin.com.au/