Bitcoin Forum

http://www.pbs.org/newshour/making-sense/is-your-money-safe-at-the-bank-an-economist-says-no-and-withdraws-his/

Harvard economist Terry Burnham is worried about the safety of his money that he formerly kept with Bank of America.  His reasoning:

1. I receive zero dollars in interest on my $1,000,000

2. They may not be able to come up with all of it

3. The FDIC only has $41 billion in reserve against $6 trillion in insured deposits

An interesting article, with some tips on what to do with your cash.  I've been seeing more and more respected economists come out talking about a very probable dollar crash, this being the most recent one.

I think everyone is feeling a little uneasy about this. But what is the alternative? Turn 1 mill into gold and bury it in the woods somewhere? If a bank employee sells the information to some criminal the person's life can be in danger. They kill for far less than $1mill.

I dont have the answers as to what the alternative is, I just know that I dont personally use any large bank such as B of A.  I think buying some precious metals is a good idea, but more so just having food.  At the very least it will give you a lower grocery bill for the next few months. 

You can put the money in gold where it's a lot more safe than the woods.

Comapnies such as Goldmoney.com allows you to buy, sell and store precious metals in their vaults. They are a debt free company, insured and their holding are independenly audited by a third party.

Is the same risk realistic in Canada, or is the Canadian banking system not in the same sort of financial dire?

I can't believe no one suggested bitcoin.

I was thinking the same thing.  But then I thought perhaps that was totally obvious??? ;)

For those of us that don't have a million in the bank it is not as scary!  ;D

Yeah was just about to mention this new thing called 'bitcoin' when the mention of burying gold in the woods came up.  ;)

Uhhh... old wisdom never dies, we just tend to ignore it because it is uncomfortable...

"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal;…"

I might add, or banks fail and governments confiscate.

Have you considered giving to some starving children. If you can't find any, pm me and I will put you in contact with some friends who works with AIDS orphans in Africa and has to turn many away every day due to lack of funds. If you think its a scam you can invest some of your money in a "vacation" and help them in person.

Those are words of wisdom right there.  Just remember:  "You are just a vapor that appears for a little while and then vanishes away."  No one can change that.

Why is he not receiving any interest on that? And not sure putting all or a lot of your wealth into BTC is a foolproof plan at the moment.

Why would one put that much money in one bank account? The bank doesn't have your money. The instant you "deposited" your money, the bank uses it as reserve for leveraging up lending. It isn't there in the bank. Your bank account is a loan to the bank, it's simply accounting entries in their books. It records how much they owe you... Not how much you have.

I dont know why.  That is a direct quote from the article, maybe you could read it and see if he elaborates on that point.

Well I think he's the most worried millionaire out of 3.73 million millionaires in USA.

It is a good article worth reading.

Basically, it says the bank gives me no interest on my deposit, and there is a risk that it fails, so the risk-reward equation does not work.  It does not consider the ease of access etc as a reward.

By the same token, BTC also fails in risk-reward equation.  There is a risk that your bitcoins may be stolen, lost etc but the (financial) reward is zero.  You don't earn interest on bitcoins.

Because interest rates on basically anything short term is zero or near zero.  Especially if it's a checking account at a large bank.  Some credit unions and online banks will give .2-.3%, but still very minimal.  The highest online anywhere these days is right around 1%.

He doesn't give a valid alternative though for $1MM in CASH.  That's a lot of cash.  He says keep some at home.  Um, ok, robbery, fire, etc.  Keep a bunch in a safe deposit box.  Well, works unless bank gets robbed, fire, etc.  Pay down debt.  Ok, a good choice always.  Prepay taxes?  Huh?  Who wants to prepay taxes to the government?  Most Americans already give the government and interest free loan each year (if you file and receive a refund).

Why he does not move into metals?

he might be right but I trust my bank and safe deposit box more than my apartment. Statistically speaking more money is stolen by the average joe being robbed than from a bank or safe deposit box. How many stories have we had about safe deposit boxes being seized for government revenue over the last oh 75 years?  Home robberies are relatively common by comparison. Even when they did do gold confiscation, they didn't go into people's safe deposit boxes unless they asked to be let into them and didn't forcefully remove gold.. people basically volunteered to hand it over, those who did.

Actually more bitcoin has probably been stolen from users ignorant in their security measures than gets stolen and not recovered from a bank or brokerage account. Just saying. I like bitcoin but facts are facts.

With that said... physical palladium in safe deposit box has outperformed fiat earning .005% in a checking account. Savings accounts, CDs, and bonds are worthless for return on investment. I'd say not to give the bank your money so they can lend it out 100x to other people, but really we have zero reserve ratio banking these days with the way the fed has the rules set up.

These are huge banks and if they failed to the point where the FDIC could not pay out deposits, it would be the least of my worries. More likely we'd have some hyper-inflationary explosion before they let that happen.

And I trust my BTC and LTC a lot more than any bank.

Terry is obviously highly intelligent, and is simply doing what he thinks is right to protect his wealth. If you arent blind, stupid, or willfully negligent, its easy to see the writing on the wall.

Yes, the US has it better than everyone else, but as has been famously stated, we are simply the best looking horse in a glue factory.

which is why a person should be diversified with their money and not put it all into any one place.. it's why I'd recommend using paper wallets and putting no more than 5% of one's total bitcoin allocation in any one wallet.. and not to put all one's net worth into bitcoin.. that's .. risky...

I may buy a house with zero down and bank on the hyperinflation taking care of the mortgage. We shall see ;)  We could have 20 years of grinding zero growth like Japan too... the national debt continues to increase at an impressive rate however. Whatever happens it will be global. Global debt levels are rising at unprecedented levels. We can no longer afford all these programs these governments have and are basically laundering each other's money.. I wonder how long they can keep it up?

Or maybe you could just tell me and save me from reading.

Is reading that dangerous?