Hyper Inflation - what happens to money in the bank

[Ag bullet]

It is interesting to consider your gold's value not so much in paper numbers... but in buying power. How many ounces of gold to buy a decent car? To buy a house? To buy a year's groceries? Those figures tend to hold up, and they aren't affected too much by inflation.

^^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.

 

[Pirocco]

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.

 

[sgbuyer]

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.

 

[Glenis]

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.

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.

 

[sgbuyer]

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.

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?