Hyper Inflation - what happens to money in the bank

Discussion in 'Currencies' started by Ipv6Ready, Dec 4, 2018.

  1. Ag bullet

    Ag bullet Well-Known Member

    Joined:
    Dec 27, 2013
    Messages:
    1,582
    Likes Received:
    1,570
    Trophy Points:
    113
    Location:
    SE QLD
    ^^this.
    people comment on the rising price of gold saying gold is becoming more valuable. i counter them saying that maybe the value of the gold is the same and the value of the fiat is going down hence why you need more of it to purchase the same amount of gold. they usually respond with a blank stare.
     
  2. Pirocco

    Pirocco Well-Known Member

    Joined:
    May 24, 2011
    Messages:
    4,872
    Likes Received:
    149
    Trophy Points:
    63
    Location:
    EUSSR
    Not in the case the inflation bringing side (central planning) drives up/down the gold price by buying / selling it when speculators do so.
    And that, post last real gold standard always been, has been / is the case.
     
  3. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

    Joined:
    May 25, 2018
    Messages:
    3,892
    Likes Received:
    1,963
    Trophy Points:
    113
    Location:
    Singapore
    Just because the US Fed bailed out the banking system in 2009 with ease, there is now an assumption that every G20 country central bank has the ability to do the same.
     
  4. Glenis

    Glenis Member

    Joined:
    Dec 25, 2018
    Messages:
    35
    Likes Received:
    25
    Trophy Points:
    18
    That's not necessarily true. Many G20 countries have now included bail-in laws. In NZ we have a very clear bail-in, we don't even have an amount of 'safe' deposits ie some countries allow $250k before the bank helps itself. https://rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution . Most of these countries are less keen on the taxpayer coping the cost of a bail-out. A depositor is an unsecured creditor and a fast and easy target to pay for the sins of the banking system.
     
    bordsilver and yuripuka like this.
  5. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

    Joined:
    May 25, 2018
    Messages:
    3,892
    Likes Received:
    1,963
    Trophy Points:
    113
    Location:
    Singapore
    Bail-in by depositors is new to me. In my opinion, the existence of a safe amount is actually to assure depositors and to deter bank runs. Sometimes the bank itself maybe solvent, but a bank run will cause a liquidity crunch and cause the bank to dump assets at depressed valuations.

    If I’m not wrong, in Singapore, the safe amount is funded using a national deposit insurance scheme that the bank pays premium on an annual basis. It is not a government guarantee. In a way, it is still being funded by depositors and shareholders.

    Unlike Australia and NZ, Singapore actually faced a real financial crisis in 1997, although not widely reported. The details of the bailout or restructure is not known to the public. There wasn't an Internet then so there wasn't a lot of information avenues other than IRC chatgroups and the national newspapers (in Singapore, all news is owned by the government). Before the financial crisis, there were 6 separate local banks in Singapore, POSB, DBS, OCBC, UOB, OUB and Keppel Tat Lee. After the restructure and bailout, there were only 3 banks left - DBS/POSB, OCBC and UOB. If there were another financial crisis, maybe we'll be left with 1 or 2 banks? :D
     
    Last edited: Dec 27, 2018

Share This Page