Are You Banking On The Banks?

Everybody Panic!

Not to be an alarmist, but the world is ending…I’m joking. But it’s coming close to it. I’d say we’re about 10% closer to a Doomsday scenario. We have covid-19 trying to trap us on one side and the Stock Market playing Russian Roulette daily on the other, and somewhere in the middle we’re all hoarding toilet paper while Banks quietly get some of the good ol’bail out money and countries print more money- all this while you still clinging on to that toilet paper.

I don’t want to say to be a Naggy Nelly, but I told you so dammit. I told you back in Feb 2019, in an Article about Amazon, that Jim Rogers has always warned about a depression worse than what he lived through. He’s said it for years, because he saw how unsustainable the global debt ceiling was, how Banks do not care for the average person, how middle class is getting wiped out, how 100K isn’t enough for a family to live. I’m no economist, I’m just a tech nerd but someone like me could put 2 and 2 together with just common sense, basic math, and logic, why didn’t the best economists & pundits not see it coming?

Covid And The Housing Crisis

Coronavirus was a very ‘lucky’ thing to happen to a tanking economy because now Governments can essentially have a free pass to bail out their banker friends, and save their rears while the average person suffers. They and their CEO friends quietly exited the stock market game in Jan 2020 just after the announcement of the “Chinese Virus”. I’m not a conspiracy theorist, but meh, it sounds a bit fishy. It wasn’t COVID-19 that brought down economies. It just showed how weak the different legs that holds up a governments, are. Healthcare, finance, social trust & competence and economics were all highlighted during this crisis. And if the country is weak on any of these things, it’ll crumble. It did, and now people know how were they’re systems in place are. In Canada, our government is pretty strong, they for the most part tried to get people to self isolate and do right by their community by following the rules of this covid19. When they weren’t listening, they made the law find these people and fine them. Healthcare for us here is pretty strong and prepared on normal days to deal with most cases. We also have a social package of $98billion to help those in need during this time of shutdown.

But even here, it’s not very 100%. We’re a solid B, but I’d take that. What I don’t like is how much of that $98billion will go to banks directly. Homeowners are being told they do not qualify to defer their payments. Many of them heavily rely on rental income, and their renters aren’t able to pay since they cannot go to work. While they get $500 to cover for most homeowners that will not cover their $3000 mortgage payment. I know 1 friend, a millennial couple, who has a home, her husband was laid off, they were told by their bank that they do not qualify for the deferring payments. They stand to lose their home. Even if they could defer, they will have to pay it all back in 1 lump sum payment when this is all over…with possible fee’s and interest added. How is this any help while Banks get a hand out.

It’s worse in the US– where the foreclosure rate will be worse than here in Canada.

 

What’s That Inflation Thing

But the scary part is now for the average person: YOU. Because your money is about to go through another round of devaluing in the madness that is the StockMarket. When it’s doing this nasty up and down thing daily, it’s not a good sign. The Stock Market is not Bitcoin, it should not be going through these major swings. But Covid-19 has spooked Fund Managers who are pulling out their stocks at records rates, and cashing in not just stocks, but bonds and gold for a reliable asset; cash. Well they think cash is reliable, but really we don’t know how long this crazy covid-19 will last. It could be another 2 weeks or 4 months. Oh and Australia’s dollar is .53 to a US dollar. Cash is going to be devalued yet again under the guise of inflation.

What’s inflation? Well, it’s what banks do to make your money worth less, so you have to earn more of it. It normally never keeps up with pay or cost of living and is arbitrary for whenever a group of bankers get together and decide, “hey you know what would be great now? If we make $100k unlivable.” Hilarious isn’t it.

Here’s a good video on understanding the basics of inflation.

How Does A Bank Screw You?

Fees. The majority of banks in the world have dormant clauses and inactivity fees, which essentially means two things.

  1. You could literally lose all of your money just by “not using it or moving it around” aka “performing transactions”.
  2. Even if they don’t take away all of your money at once or close the account, they will probably charge “yearly” fees which will diminish your money in no time.
  3. Daily fees for using your own money in your account.
  4. Fee’s for withdrawing your money from a bank atm that isn’t yours
  5. Fee’s for NSF, or overdraft, or extra interest, because why not.
  6. Fees for this and fee’s for that, all of it, is a price you pay for using your own money

I don’t have to plug in a sales pitch for Bitcoin, it basically sells it self right now.

So when people feel assure that banks are “insured” and a safe way to store and save your money, I would disagree in some cases, especially for the long-term.  Banks have enough clauses to lock, block, freeze, and nickle and dime your wealth away if you forget about it.  What good is the bank if you can’t park your money and forget about it?

Banks are ‘good’ for temporary transactions at the moment and also the international SWIFT and PLUS network are admittedly useful, but they are increasingly being threatened by cryptocurrencies. I moved 1 bitcoin from my wallet to another wallet, paying pennies in fees. I store it there with no fees and I don’t have to worry about a middle man charging me interest for having my crypto sitting there doing nothing.

What Is Safe Then?

Now, many of you will think I would probably default to “store all of your money in cryptocurrency”.  I don’t think we’re there just yet, but we will get to that point in the future, with currencies like Bitcoin already being recognized by the pros as a “store of value”.

But perhaps some sort of registered investments including stocks, bonds, ETFs, mutual funds could be a good way to park your money to meet some of your objectives….I mean except for when things go bad like it’s doing right now…. with all the Covid-19 madness and the fact that we’re heading towards a depression.

But if you ask me, you want to “set it and forget it”, then I can’t think of a more timeless store of value and wealth than precious metals, stored in a safe and secure facility. I know what you’re thinking, every investor, trader and economist has been shouting saying GOLD IS THE WORST!!  It’s a bad investment, as the Forbes writer says. Well, the dollar used to be backed by gold, which is where it got it’s value from, now we just print money from thin air (and we’re still obligated to pay taxes despite that fact). But even though we don’t use gold as backing now, Banks all over the world still trade in it and having been hoarding it for a decade now. Why would they need to do that if Gold is essentially a bad investment.

In 2017 Gold was worth $1600, now it’s worth $2000, while everything else on the market crashes.

Cash will always devalue, while many of the metals are surely guaranteed to have increasing value in the future, at or above the rate of inflation in the worst case (vs if you park your cash, the bank will start eating away at it or many other risks as well).

Dormant Account? It’s Not Yours Now.

  • After 2 years your account goes “dormant” and they will disable your online banking and card.
  • After 10 years they close your account and remit it to the Bank of Canada (good luck getting your money after that, by that time you will probably have lost all of your account info needed to claim the money).

If you thought that if your name is on the account and you have money in it, and you just choose not to ever touch or use that money, well it’s considered dormant and you need to do a transaction to keep it open with them. Ah what? That should never happen right? If you have money in a bank account which you just don’t want to touch until your 60, that should be your right, right? It’s your money after all right?

Wrong. It’s being held by a Bank. It’s like a storage facility. You rent a storage unit, but if you don’t use and pay for it monthly, they take it for you and sell your stuff. Same for a bank. If you have a bank account and you’re not doing any transactions that make them money, they’re going to take it.

Banks Don’t Always Protect You From Fraud

Take this example of a poor lady in Canada who was carded, and even though the bank knew it was fraud and the person who withdrew in person, at the bank, where they didn’t check for ID, says it is “your fault and we don’t protect you or refund you”. 

Your money is insured yes, but it’s not really you being insured, it’s the bank being insured. For most all personal accounts in Canada, up to $60,000, anything above that, sorry not their problem. A little policy they don’t bother telling you about when you sign up for that account. But they go into great detail about the fee’s you’re responsible for paying.

Are Banks Evil Then?

Well not really evil but not good either.  We bank everyday. We have transactions, payments, business, bills, daily usage, and much more daily and there’s really no getting away from that. Banks are all around us and it makes our financial system turn. But with crypto coming hard into the scene we might see a major shift in the way we bank in the next decade. I can use my bitcoin for more things now, and with less fee’s and the money doesn’t just disappear because I don’t touch it for a couple of years.

What are your thoughts?

Cheers,
Areeb

Areeb Soo Yasir

Business and technology have always gone hand in hand for me, and now I've built nearly 20 years of expertise. A few notable achievements: -> Tier III-Designed & deployed multiple mission critical datacenter environments in Canada, US, Hong Kong, Singapore & China. -> Software Engineering: Created a Linux OS from scratch, including a custom kernel to maintain millions of dollars in client infrastructure, deploy and report as needed. Created the “Windows Geeks” and “Password Pros” Windows Password Reset software recommended by Microsoft. -> Business Negotiations: Conducted intensive negotiations with branches of the Peoples Republic of China and the various state-run Telecom operations including China Telecom and China Unicom for access to their trillion dollar backbone infrastructure. We were the first western company to have such network access where other IT companies such as Vodafone and Google failed. -> Cloud Infrastructure Creation: Created the first proprietary “Clustered Cloud Architecture” that rivals competing Google, IBM, Microsoft & Alibaba alternatives. I'd love to chat #IT or #Linux or even #Business, so don't hesitate to connect. Cheers!

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