Sure, keep trusting those “experts”
I am not a financial expert nor am I an economist – but considering they all have missed virtually every significant financial event from the dotcom bubble to the telecom bubble and the housing bubble let’s just say not being an economist or financial expert probably is a distinct advantage.
Having said this, I would like to discuss a few issues which need to be out in the open and discussed before the new Congress begins.
Bank runs are bad
Banks do not keep all of their assets in cash meaning if the majority of a bank’s customers decide to withdraw all of their money at the same time, the bank collapses. Think about it – they loan much of the money they have to others and don’t have access to it all. When one bank collapses there is a chance other investors will get spooked and create a cascade of bank failures. When not stopped, you have the potential for another Great Depression.
Bank runs are currently stoppable because governments can stop them
To date, bank runs have been stopped because governments around the world have been able to stop them by assuming the bad loans the banks have made.
Soon, global governments may not be able to stop the bank runs
With all the debt global governments have amassed, there is a possibility at some point that investors will start a global bank run meaning county after country will see their banks collapse because the confidence in the ability of a country to pay back its debt has plummeted.
Ireland may kick off a worldwide panic
If you follow financial news you may know much of Europe is in trouble because in general they work less hours than they should and produce far less than they need to in order to sustain the lifestyle they live.