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<p>[QUOTE=&quot;doug444, post: 1926939, member: 38849&quot;]&quot;...If the banking system fails 90% of the money supply disappears...&quot;</p><p><br /></p><p>This is completely wrong.&nbsp; The general definition of money supply is currency plus demand deposits in financial institutions.&nbsp; First of all, currency is not going to disappear.&nbsp; During a bank run, it may move from the bank into the hands of the depositors, at least till the cash runs out, but it is still in the economy.&nbsp; Demand deposits are a little more complicated.&nbsp; In theory, deposits are insured by the FDIC up to a certain dollar amount, currently $250,000., although there are ways around this limit.&nbsp; The coverage ratio is currently LESS than ten percent. </p><p><br /></p><p>If and when the FDIC runs out of money and/or NOA, the government itself creates money out of thin air (like it has already created hundreds of billions) to fund the FDIC.&nbsp; <u><b>Maybe.</b></u>&nbsp; In the Cyprus &quot;bail-in,&quot; depositors and shareholders were given no choice but to share part of the loss.&nbsp; If you think it can&#039;t happen here, you&#039;re wrong.&nbsp; Note:&nbsp; if you have gold or silver hidden in your basement, there&#039;s no &quot;counterparty risk,&quot; provided you keep quiet about your holdings.&nbsp; In any case, the money-creation (actually a credit expansion) dumps billions if not trillions into the economy, and hyperinflation becomes all the more likely.&nbsp; A systemic bank failure also creates massive unemployment, but I&#039;ll save that for another time.&nbsp; It would be the end of our country as we know it.&nbsp; This is why the Federal Reserve has no choice but to keep buying Treasury securities.&nbsp; This strategy, of course, cannot go on forever, either.&nbsp; If you don&#039;t think we&#039;re hopelessly screwed in the long run, you&#039;re very naive.</p><p><br /></p><p>The &quot;solution&quot; most often kicked around is for the Federal Government to simply repudiate a substantial portion of its debt, but that&#039;s another post too.&nbsp; Which would you rather have when the crunch comes, your net worth in incomprehensible bookkeeping entries, and paper money illustrating dead Presidents, or in precious metals?&nbsp; Diversify.&nbsp; Protect yourself.&nbsp; Educate yourself.[/QUOTE]</p><p><br /></p>

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