In deflation, the smart thing to do is to withdraw your cash from the bank and put it in a safety deposit box. A no brainer. Last week we heard Chase is forbidding cash in safety deposit boxes in some markets. Now come the Swiss who are forbidding the withdrawal of cash to do so.
We have the rule of law, but people are betting their financial futures on an utterly delusional understanding of the law.
O well. What goes around comes around.
Feel free to forward this by email to three of your friends.
Indeed, although we all know that fractionally reserved banks literally don’t have the money their customers hold in demand deposits, the contract states clearly that customers may withdraw their funds at any time on demand. The maturity of sight deposits is precisely zero.So how come the unnamed “large bank” (they should have named it, just to see what happens…) is so bold as to break the law by refusing to pay out funds in a demand deposit? Note here that it is indeed breaking the law, as there is nothing in Swiss legislation that states that banks are allowed to refuse or delay servicing withdrawals from demand deposits upon request.The writers have this wrong. Yes, they are demand deposits, and yes they are fractional reserve which is fraud, but when you make a deposit to a bank, you lose title to the money. You are giving them money to lend out, and the bank owns it. You are as last-in-line unsecured creditor. That is why banks have deposit insurance: there is nothing there, you can lose your stake, and you can sue, with all of the power of a unsecured creditor.
We have the rule of law, but people are betting their financial futures on an utterly delusional understanding of the law.
O well. What goes around comes around.
Feel free to forward this by email to three of your friends.
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