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<p>[QUOTE=&quot;Owle, post: 1261840, member: 22004&quot;]There was this article on Gary North&#039;s site today:</p><p><br /></p><p>The Case of the 92-Year-Old Lady Who Cannot Get Currency Out of Her Bank</p><p><font size="2">Franklin Sanders</font></p><p><font size="2"></font><a href="http://www.cointalk.com/8465print.cfm" class="internalLink ProxyLink" data-proxy-href="http://www.cointalk.com/8465print.cfm"><font size="2"><img src="http://www.garynorth.com/members/images/pfriendly.gif" class="bbCodeImage wysiwygImage" alt="" unselectable="on" /></font></a> </p><p>Sept. 8, 2011 </p><p>I am not yet sure what to think about this. I loathe to bother y&#039;all, but feel obliged to pass it on. </p><p>A couple of weeks ago a customer, a charming 92 year old in Texas, talked to me about selling her gold. Her son, who trades futures and whom I know well, was expecting a big drop in gold, and he wanted her to sell. I demurred, but she wanted to sell it, and I always allow that reasonable minds can disagree about markets. Besides, I&#039;m her servant, not her master. She sold it for about $673,000. </p><p>I sent her a check, and encouraged her to deposit it as quickly as possible. Last week she took the check to her bank in Texas, not far from Dallas, and told them she wanted to cash it. They called my bank and proved that the check was good, and she told them they could have time to clear the check. She also knew they&#039;d have to order the money from the Federal Reserve and it couldn&#039;t get there until Thursday, and that was fine with her, too. Still, they refused. Then she went climbing up the bank bureaucracy, refused at each level, until she reached the head knocker. </p><p>Refusing to cash the check, he said with great oiliness, &quot;We only have your interests at heart. We&#039;re concerned about our obligation to you.&quot; </p><p>Texas women know their minds, and can get pretty tart. &quot;Your obligation to me,&quot; she snapped, &quot;ends when you cash that check.&quot; </p><p>She even fell back to this position: &quot;Tell you what I&#039;ll do. You get me the cash, and I will put it into a safe deposit box right here in your vault.&quot; No good. Her &quot;best interests&quot; still stood in the banker&#039;s way of complying. </p><p>Let me add at this point that you might confusedly think that a 92-year old might not know her own mind. You&#039;d be wrong in this case. Besides, her fully grown son of 50 years age or more was seconding her action. </p><p>Next try: &quot;Okay, you get me $50,000 this week, and $50,000 next week until the whole check is cashed.&quot; Nothing doing. </p><p>Her son called the Texas Banking Commission. While the bank has no legal obligation to cash the check before it has cleared, it certainly has the obligation to let her withdraw her own money when it&#039;s in her account. </p><p>First Banking Commission bureaucrat stuttered, &quot;Oh, you can&#039;t do that! There are IRS issues!&quot; </p><p>Nothing deterred, her son answered, &#039;I don&#039;t care if she has to fill out FIFTY forms. She&#039;ll do that, she just wants her money.&quot; No help there. He went uphill to the next bureaucrat, but was only told that they couldn&#039;t help him. </p><p>Now what do you make of this? </p><p>First, the raw fact: the bank refused to give the lady her money. Her money. Doesn&#039;t matter whether it was $100 or $673,000, even when she gave them time and latitude, they refused. </p><p>Next, one must infer that there is some level of cash banks will refuse to disgorge. Whether they are acting under orders and policies from the Federal Reserve or their own bank, at some level they refuse. Are they afraid of bank runs if the news gets out that one little lady pulled her $673,000 out in cash? </p><p>Maybe the Fed has them squeezing down cash demand because they just don&#039;t have much cash. Most business nowadays is conducted in pure electrons of bank credit. US government and the banking system have been trying to eliminate cash from the system for 30 years. I know from talking to sources at the St. Louis Fed and the US Treasury back in 1998 that about 70% of the $1,034.094 billion of currency issued by the Federal Reserve system (as of 31 August 2011) circulates outside the country. That leaves only 30% within the US, or $310.228 billion to spread among 311,800,000 people. That&#039;s $994.96 per head. </p><p>Maybe that&#039;s why my customer couldn&#039;t get her cash. There&#039;s not enough. </p><p>Or, as y&#039;all may have noticed, once a bank gets hold of large amounts of your money, they seem mighty reluctant to turn loose of it. Their wheels seem to grind slowly when it comes time to withdraw, a lot slower than when they took the deposit. </p><p>Whatever the bank&#039;s reasons for refusing, the raw fact remains: the bank refused to give the lady her money when she demanded it. Now the friends of paper money may quibble that she might have drawn a check on the funds and bought something else, but I call it a defalcation. When the bank holds her money as a fiduciary and refuses to give it up, that&#039;s a defalcation. </p><p>The time may be drawing nigh, or may have arrived, to trim all bank balances to an absolute minimum and keep unused cash balances in silver or gold. Now shake all that cobwebby propaganda and nicey-nice talk out of your head and face the truth. Look it dead in the eye. The banking system is utterly corrupt, and will not balk at stealing your money large or small. The government will help them. A fractional reserve system is bankrupt by definition: only a fraction of its deposit liabilities are covered, and a right tiny fraction at that. </p><p>For the past ten years in one case and three years in another I have been managing the unused cash --- funds not needed for at least twelve months -- for two organizations. I have kept as much as possible in silver and gold, and that has paid off wondrously well. </p><p>But any well-trained financial adviser will point out the risk in that: the silver or gold might drop just about the time you need to liquidate for paper dollars. </p><p>Right, it might, but it hasn&#039;t caught me yet. Besides, putting the unused balances into silver &amp; gold aligns our assets with the primary trends: the 15 to 20 year trend carrying gold up and the primary downtrend carrying US dollars down. </p><p>And if gold and silver do drop? Well, I have left enough of a cash cushion to take care of most eventualities. So if they do drop, I just hang on and wait for the primary trend to bail me out. Meanwhile, valued in paper dollars, our unused balances in gold and silver are a lot bigger now than they used to be. </p><p>Don&#039;t forget that keeping unused balances in metals has a cost. The spread between buy and sell is about 7-1/2% to 10%, so silver or gold must rise that much before you break even. Can&#039;t do this with money you might need in three months. </p><p>And no investment is forever. At some point the precious metals bull market will end, and we must sell, but that point is so far out there nobody can see it from here. Three years at least, and probably longer. </p><p>Look at it another way. What if the banking system takes a holiday? What if your particular bank goes bust? What if the government and the banking system limit withdrawals &quot;during the emergency&quot;? In that event, would you rather own silver and gold, even falling silver and gold, and have control of them outside the banking system, or own bank deposits which you cannot control or withdraw? </p><p>Something in your hand, or nothing? Gold in hand, or untouchable electrons in banks? Which do you prefer? </p><p>Taking all risks together, keeping unused balances in gold or silver makes more sense to me than keeping them in a bank. However, I freely confess, admit, and warn that most people --- including most mainstream financial advisers -- consider me a paranoid or lunatic about the banking system. You must think about that before you act on my recommendation, and take into account of all the ways it might lose you money. </p><p>Listen: I do not aspire to play Chicken Little. I try hard to look on the sunny side of everything &amp; hope for the best outcome, but there just ain&#039;t one with banks, any more than there is with fever blisters. It&#039;s about time for y&#039;all to take the money and run, before they take it from you. </p><p>Think about it. I&#039;m not saying do it today. You might wait a week or so to see where gold and silver land after yesterday&#039;s drop. </p><p>What are the practicalities? I prefer the big, low premium gold coins like Austrian 100 coronas or Mexican 50 pesos or even Krugerrands. They have the same spread as American Eagles, and no risk of losing premium. But buy what makes you comfortable. Very best wishes, Franklin Sanders The Moneychanger</p><p><br /></p><p>Why wouldn&#039;t they cash the check?</p><p><br /></p><p><a href="http://www.garynorth.com/public/main.cfm" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.garynorth.com/public/main.cfm" rel="nofollow">http://www.garynorth.com/public/main.cfm</a>[/QUOTE]</p><p><br /></p>

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