Cyprus banks seized depositors' funds. Can't happen here, right?

Wrong. The funds we've put into banks don't belong to us. We are "unsecured creditors" and our bank records are simply IOUs.

An interesting document put together by the Bank of England and the FDIC outlines exactly the kind of scenarios that just happened in Cyprus when they occur in our countries. It's a long read. Here's a brief clip, just insert yourself and your cash wherever you see the terms "unsecured creditors" or "original creditors". The scheme is to convert your money into "bank equity". Oh boy, stock in a worthless company!

12 Under the strategies currently being developed by the U.S. and the U.K., the resolution authority could intervene at the top of the group. Culpable senior management of the parent and operating businesses would be removed, and losses would be apportioned to shareholders and unsecured creditors. In all likelihood, shareholders would lose all value and unsecured creditors should thus expect that their claims would be written down to reflect any losses that shareholders did not cover. Under both the U.S. and U.K. approaches, legal safeguards ensure that creditors recover no less than they would under insolvency.
13 An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company into equity. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution. Throughout, subsidiaries (domestic and foreign) carrying out critical activities would be kept open and operating, thereby limiting contagion effects. Such a resolution strategy would ensure market discipline and maintain financial stability without cost to taxpayers.

The mattress is looking more and more like the safest place to keep money.
http://www.fdic.gov/about/srac/2012/gsifi.pdf

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You're a daisy if you do.
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84 Euro 240D 4spd. 220.5k sold
04 Honda Element AWD
1985 F150 XLT 4x4, 351W with 270k miles, hay hauler
1997 Suzuki Sidekick 4x4
1993 Toyota 4wd Pickup 226K and counting

Deposit insurance is there for low levels of failure. Who would know what to expect in a major overall financial failure mode. Mattress stuffing is out of the question with inflation if a major financial upset did not occur..

Just the other day I purchased a pretty complete specialized woodworking shops equipment. Most the stuff was less than ten years old and in excellent condition but current retail prices where double of what he originally paid.

So I landed up having to pay almost half of what those many items are retail today. In the final anyalisis I decided one now has to calculate price by the ever increasing current costs as a baseline.

To buy the same quality as the items he had today new is over double what I paid plus tax. The icing on the cake is one good weeks work with the equipment pays the capital cost because the economy has enabled this as well. Plus of course his product is both very strong and in demand and will continue to be so in my opinion.

He had a good thing going but at his age that is approaching ninety he had to give it up for health reasons. What he should have done perhaps is get a younger guy working for him. That is what I will attempt to do with this equipment. Money working for you under your own direction is probably the best ideal anyways where and when possible.

Age had slowed down his thinking as the value really was in what that equipment was already manufacturing. Basically a turnkey already existing business with current demand growing. The best thing is the worse the economy gets the better it would perform. It does well enough in current times as well. Really good times might dampen it a little though.

He ran it out of his home basement. That was another complication he should have dealt with much earlier. He was never meeting demand and always behind the increasing orders flowing in.

Two of my son in laws know what I intend doing and want to buy half. Partnerships seldom work properly so I may have to figure out something else.

To have one go bad with family members would or could be a real disaster. One important thing was the old fellow did not realise the product should do well marketed nationally. Return on investment could be massive if that was enabled.

I can almost see myself travelling all over north america to buy more automated equipment all too soon once we get it going again. To me this is the proper type of thing to bury some money in. It deals with both inflation and security issues fairly well. Personally we do not seek more money but some better protection for what has already been aquired. Or at least some of it. I do think there has been some errosion of it's value already.

Money is just another belief system. If enough people change their minds and quit believing then the money is worthless.

The meaning of work has been lost. Most "work" produces nothing. "If you don't work, you don't eat." Kinda meaningless these days.

This is another reason you shouldn't hold a lot of cash in banks. Spread it around.

Also only bank with very old, very conservative small local banks. The bank I do business with is 160 years old and AFAIK they have not had to foreclose on one house since 2008.

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1999 SL500
1969 280SE
2023 Ram 1500
2007 Tiara 3200

Just keep a lot of accounts in FDIC covered banks. Long ago I knew an Actor who had a stack of bank books, which were how they kept records then, from Banks all over the country.

I asked him why and he said he would put money in each bank up to the insured limit, which I think was $5,000 in those days, and if one failed the FDIC would cover his loss.

He had seen too many people invest in stuff that went bust, so he just kept on working and putting money away for his old age.

He did admit that some investments could pay off, but the only Actor he could think of that ever made any real money in investing was Moe Howard (real name Moses Horwitz) who invested in raw land near downtown LA.

If I'm not mistaken, in the above linked scenarios FDIC insurance is only a pipedream.

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You're a daisy if you do.
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84 Euro 240D 4spd. 220.5k sold
04 Honda Element AWD
1985 F150 XLT 4x4, 351W with 270k miles, hay hauler
1997 Suzuki Sidekick 4x4
1993 Toyota 4wd Pickup 226K and counting

Exactly.

It's a common myth to think that FDIC will cover everyone's deposits - it will not. Read the book by Peter Schiff: The Real Crash. I think it's a great read from start to end.

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1987 Mercedes 300SDL; SOLD
1985 Mercedes 300D; SOLD
2006 Honda Pilot - wife's ride; 122K;
1995 Toyota Land Cruiser - 3X locked; 182K