[Falconoffury]

I found several articles on the web which tell of thousands of banks which failed during the 1930s.

$this->bbcode_second_pass_quote('', 'A')s the economic depression deepened in the early 30s, and as farmers had less and less money to spend in town, banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion disappear through bank failures.

[scw86]

I too was just comparing the Argentina economic crisis with our own. Wikipedia does a good job summarizing it in relatable terms including the events precending up to it.

http://en.wikipedia.org/wiki/Argentine_ ... 99-2002%29

Huge national and private debts, uncontroled government spending, cheap imports and a reduction in local industry all leading up to the massive devaluation of the currecny. Sound familiar anyone. The dollar doesn't look good in any case as a financial medium for ones assets.


"Massive tax evasion and money laundering explained a large part of the evaporation of funds toward offshore banks."

This time seems to be the war in Iraq and other corpoarte give aways to such companies as Halliburton.

[gego]

Here is a huge difference between the 1930's and today:

In the 1930's gold and silver were money. There were gold coins and silver coins. The currency was either gold certificates or silver certificates that you could take to the bank and surrender for gold or silver coins, so this portion of the money supply was not debt. In the 1930's on the other hand, your checking account or savings account was a debt of the bank. When people started to fear that the banks were in financial trouble they went to the bank to get either gold or silver coins or gold or silver certificates. The banks could not manufacture these out of thin air so if they ran out of what they had they had to close their doors.

Today the coins we use are fake and only look like they are silver. There are no circulating gold coins. There are no certificates which represent a claim on gold or silver coins since the coins themselves do not exist. What circulates as currency is just the command that "this note is legal tender for all debts public and private" inscribed on a promise to pay nothing by the Federal Reserve Bank. You cannot turn this not in for anything at any bank unless you want to turn it in for a checking or savings account. If you have a checking or savings account and feared the failure of your bank and went to get currency, then the bank can get an unlimited supply of these pieces of paper from the Federal Reserve Bank; all they need to do is print more up and loan them to the local banks. This plus the illusion of depositor insurance makes runs on banks unlikely.

This does not mean that your savings account, checking account or currency will retain value, but the value will be eroded gradually by its loss of purchasing power rather than being eroded instantly by default. The real trick is to defend against the correct danger, inflation, rather putting any significant portion of your wealth into currency in your matress.

[rogerhb]

I watched Mary Poppins with my children a couple of days ago. The boy wanted his tuppence to "feed the birds" and caused a run on the bank. I'd totally forgotten that part.

[gego]

Sorry, I mistyped part of my reply.

Essentially I agree with Falconoffury's strategy. Don't keep any more in checking or savings accounts than is necessary to operate month to month. Don't keep much in currency in your matress because it too is subject to loss in value.

If you have some gold and silver coins to act as insurance against failure of the current financial system, and if you have real assets with value toward your survival then you have insulated yourself somewhat.

The problem unfortunately for most people is they have little wealth to worry about losing, so they have little wiggle room to prepare for bad times.