[cgbg]

This thread seems to be confusing two different things:

—Bank liquidity

—Bank solvency

Liquidity is do you have enough cash or a way to get enough cash to pay depositors when they demand money.

Solvency is the state of the bank’s balance sheet, the assets vs the liabilities.

Liquidity matters to depositors.

Solvency matters to shareholders.

The FDIC is insurance for liquidity up to 250,000 per account. The FDIC is technically insolvent but it highly likely Congress would bail them out if they ran out of cash.

Any small or medium sized bank with significant office building holdings is probably insolvent—but they are not forced to face reality until bank examiners show up and crunch the numbers. At that point the federal regulators can order them closed if they wish. If that happens the depositors have their money put in another bank.

[C210N]

Consider systemic failures.

That’s where I believe we are headed. And, not because of any inaction, but by designs. The system MUST fail, fiats don’t last more than a few hundred years. The so-called “debt”, which is a fallacy in itself, because a dollar by definition is debt when it is printed into existence.

Expect the $34T and the bigger $250T beside it in other accounts, to be wiped clean in a black-swan reset.

We’ve never really paid any principal whatsoever to the “national debt”, system is not designed for that to happen. Only thing that has mattered was an ever-increasing M2 money supply. The notion of the FED reigning in inflation to a 2% target is ridiculous - it’s like a mugger taking 2% of what you have, compounded every day.

Liquidity/solvency will no longer matter in that specific scenario.

[GOPJ]

Banks with $15.2 million to $110.2 million in transaction accounts must hold 3% in reserve. Large banks (those with more than $110.2 million in transaction accounts) must hold 10% in reserve. These reserves must be maintained in case depositors want to withdraw cash from their accounts. Google

Ten percent gives people fighting chance...