#523893
Postby 1nvest » August 20th, 2022, 3:25 am
Have to smile. DEPOSITORY system, not custodial. Any money you deposit is then the banks money, free for it to do with what they like within regulation. In effect a loan by you to the bank. So they want to limit how much you can lend the bank, or require you to pay to lend above a certain level. Which seems odd given that they set the interest rate, in some cases 0%, which is suggestive they simply want you to pay to lend to them. Or I suspect is some wormy protection mechanism, where depositors will potentially be at greater risk at having to bail the bank out if its bets with your loan to them turn bad.
'Wise' as mentioned earlier is more of a custodial bank, where they use Gilts as the 'safe' and keep the interest for themselves.
The best custodial bank in the past 0% interest rate world was hard cash/currency locked away in your own safe keeping. Which if US$ hard currency has paid a 3.5% annualised yield since the start of 2008. £1 bought $2 back then, $2 recently buys £1.66. 66% gain in 14.5 years. Alongside physical gold coins also in your own safe since 2008 - that as at the end of 2021 had gained 8.6% annualised since 2008 !!!
A nice feature with US$ bills is that they never go out of circulation. Unlike Pound notes that 'expire' have to be submitted by a certain date when they are withdrawn, with US$ they don't do that, banks themselves simply swap them out as and when they're paid into the banking system. But it is a fiat currency, with a targeted 2% devaluation (inflation) rate, in contrast to gold legal tender being a commodity (non-fiat) currency.
US$ is the primary reserve currency, no longer bound to anything tangible such as gold, simply just a number, such that they can print/spend however much they can get away with, where each $ printed/spent devalues all other notes in circulation. Exports inflation onto others. Enables the US to print/buy a massive military might to maintain its dominance. And where all clearance traverses through the US so they can block at will US$ based transactions. Russia, India, China along with much of Asia with it (including to some extent Australia given its trading relations with 'neighbours' such as China), South America, Arabia, and Africa in the pipeline ... are all tending to drift away from the US$. Given the combined population counts of those countries - that's most of the world are tending towards not use the US$ and the fiat/depository based system it prefers.
It's not as though its just banks. Consider the states terms and conditions for Gilts. We reserve the right to print/spend money - induce inflation. We reserve the right to change interest rates and taxation rates, or other rules. Yes supposedly the BoE and Treasury are separate/independent, but largely in name only. As a indication of how independent - well the BoE printed money to buy up Gilts that the treasury had issued, and then repays all of the interest paid out on those Gilt - back to the treasury. As could it easily just tear up those Gilts rather than the treasury having to pay to redeem those Gilts. Pension funds are legally bound to buy Gilts, by law, as the T&C's as-is can have the state top-slice out of those pension funds through one means or another - raid pension funds.
Changes such as the OP's highlighted change - are all just small shifts towards seemingly collapse of the entire setup. As occurs with all fiat currencies sooner or later. Generational wealth tends to favour art/land/gold - tangible/real assets, for their ability to withstand the coming and goings of fiat/depository type eras. When they start clamping down on those - that's when generational wealth will be shifted to 'safer' regions and is the penultimate indicator of total failure in the fiat/depository system. If/when they outlaw gold for instance, that's probably a good time to buy gold in a location where its ownership isn't outlawed. But seemingly we're not quite yet into that phase.