Any thoughts.

-- Jack (jack@aol.com), January 25, 2000

Answers

Jack,

What's the question?? What's your point?? A little help here, OK?

-- Michael (michaelteever@buffalo.com), January 25, 2000.

Considering that the FDIC had to shell out $750 million just to bail out one bank (Keystone); and there are roughly 10,000 FDIC-insured institutions in the US; that $29 billion could be stretched pretty thin if things got bad...

-- I'm Here, I'm There (I'm Everywhere@so.beware), January 25, 2000.

The government will make good on every last $ in every FDIC insured bank there is if there were ever a banking collapse. PERIOD!

Of course, they may have to run the printing presses around the clock to do it.

-- J (Y2J@home.com), January 25, 2000.

J,
The presses already run around-the-clock, they would have to retool the press and add zeros to all the bills.(grin)
Or just give you "New Dollars" at the "official" exchange rate.

-- Possible Impact (posim@hotmail.com), January 25, 2000.

The FDIC insures the banks,not individual depositors,if they tried to make good on the actual amounts in their Ponzi scheme ,the $ would be worthless.

-- James (brkthru@cableone.net), January 26, 2000.

Exactly my point, James.

-- J (Y2J@home.com), January 26, 2000.

So you get all your money back (if the bank wants to) and you need a wagonload of cash for a loaf of bread,Gee I'll sign up for that.

-- James (brkthru@cableone.net), January 26, 2000.

James,

The "insurance" aspect of FDIC is not very assuring from the depositor's standpoint: $29 billion isn't very much spread across the entire banking system.

FDIC is meant to instill trust in the system, no matter how perilously the system is put together. It is more "insurance" that the system doesn't collapse from a bank run than "insurance" that you'll get your $ back.

Although as I said above, I do believe the govt would inflate the currency as necessary to fulfill FDIC's promise. As you said, if it took a wheelbarrow full of currency to buy a loaf of bread, it would be a hollow promise indeed.

-- J (Y2J@home.com), January 26, 2000.

From a UK/European perspective, this does sound a bit, er, irresponsible.

Over here the guarantee is on only 90% of your savings, up to a maximum of #20,000 (about US$ 30,000). The 10% you'd lose shouldn't be the end of anyone's world, but might encourage folks to think just a little about a bank's credentials. The upper limit (per bank) means that moderately rich folks have to spread it around a bit, and seriously rich ones are on their own (they can well afford to take advice on risk and avoidance thereof).

-- Nigel (nra@maxwell.ph.kcl.ac.uk), January 26, 2000.

We must remind ourselves that most 'money' today is 'electronic', not paper. The only thing that Congress would need to do is set up an appropriations bill to reliquify the FDIC just like they did in the very early 1990's after the S&L crisis. They just tossed the 'electrons' into the system and tabulated the figure as part of the US .gov debt. The question is, how much will it 'cost' us this time and what will the effect be in this environment.

My guess is $750 billion (vs $250 billion last time) and a snap in confidence leading to a severe increase in market interest rates, bond buy backs by the FRB (repos, monetization if the debt) and a significant inflation for about ten years, coupled with a recession economy. Similar to the 1970's, only worse.

Yuck!

-- ..- (dit@dot.dash), January 26, 2000.