No more savings withdrawal penalties. You can pull money audio savings account as many times as you want to but let's get into it.
Why the Federal Reserve decided to get rid of that and what the implications of this are?
Because I don't think people really think about why this was in place, to begin with?
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I know a lot of people fall into the habit of putting money in their savings on the transfer right back to their checking and normally in a normal world I guess you could have done that six times and after the sixth time you did that then you get charged like a five-dollar fear so and so.
You might think oh yeah that rule was there to protect me so I don't pull money out of my savings and I can just you know really improve my financial situation but sadly that is not the reason. Why would that rule there in the first place? Before mid-March, we had something called a reserve requirement.
Limitations On Checking Account
If you didn't know when you put your money into a checking account it's no longer your money. They actually lend that money 10x over and what they used to have in place was a reserve requirement where if I put in a thousand dollars they have to keep at least $100 in the bank then you can loan out the rest of that money and like I said that was only on checking accounts.
No More Saving Accounts Limits
What savings accounts there was no limit baby. The minute you put your money in there they could loan all of that right out. There were no requirements to actually have any of that on reserve for you.
So if you're putting all your money out that would be a problem right because they would have to pay you all that money out now but all the ways they loaned out won't be coming right back immediately right.
So you're acting for your money now but they won't get the actual money until maybe 5 10 years from now depending on what kind of loans they were actually giving out.
After mid-march Federal Reserve was like actually nevermind we don't need to keep any of your money on reserve and that 10% which was actually a maximum mind you. Some banks don't have to even keep 10% of your money some things we need to keep 2% but not everybody only has to keep 0%.
That basically means your $1000 can get loaned out over and over and over and over again and who knows how much money that actually will really create and that works pretty well in these days because most people use credit cards and use debit cards okay.
What Happens When You Pull Out Money From Banks
A lot of people actually only use credit cards which means they don't actually have any of that money at all, to begin with. There are only $1.7 trillion of Federal Reserve notes I keep calling your money but it's not really the money but of these Federal Reserve notes actually outstanding and the rest is digital.
They can just keep on lending over and over again because there have not been any bank runs yeah where people are trying to pull all their money out because once you pull all the money out of the banking system that banking system is dead because now they have nothing to really leverage off of and the quick side note.
I really wish people would take time to get more educated on the banking system because I think we thought we focus so much on political things when it's really the banks.
Let me know in the comments if you want me to do an article on the banking system and kind of really exposing it in one cohesive article because I think I sprinkle things here and there but never talk about it directly.
Yes, it's basically a straight-up free-for-all right now in the banking system all of my to put in there is not yours. You sign that agreeing to it. So a lot of people say yes I agree to these terms and conditions I'm guilty of it too.
Basically, just understand them when your money is in there. It is not in there the banks are what really control most of the money in this world.
You would think because the Federal Reserve actually prints the money that they are the ones who are mostly in control of it but they don't have a lot of control.
When they print money it goes into the Reserve Bank of the institutions that they actually deal with so not all banks actually have access to the Federal Reserve. But the way it works is that they can put the money into the reserve and then hopefully the banks will do what the Federals are wanted them to do.
The banks have the real control because they're the ones actually giving the money out the money is loaned into existence and if you don't really understand what I'm talking about I have an article that goes into detail about the monetary system
Obviously in this world, we really do have a leave alive on everything being digital. I'm not telling you to go pull all your money out because you know at least for me I do have to use the banking system a lot because all my bills are paid through a bank system I don't pay with cash it is quite convenient to pay with your debit cards.
Tangible Assets
I'm not going to say that I am someone who doesn't use a banking system but it's diversified. Diversification is not just stocks and bonds it almost grinds my gears and people say that it's literally thinking about a lot of different things.
Stocks and bonds are intangible what about some tangible assets things that you can actually hold and actually own not only just gold and silver or real estate but think that people might really need in the future because we don't know what's going on right.
So like right now for example there's going to be meat shortages maybe buy some meat I don't eat me but I mean if you have something that you can kind of work with, you want to have some actual assets things that people are actually going to want right now some toilet paper if you had toilet paper you probably be in a good position right.
Really think about having physical things that are of value to people not necessarily just to make a gain on but to actually use in random times.
I'm not saying these times are gonna come now but it would be really unfortunate for you to not be prepared if this were to happen nothing is wrong with over preparation.
The world as we know it has dramatically changed maybe when we were younger. I'm a 90s baby so maybe when we were younger you know you see your parents having double-digit returns on their savings account and then they had a pension and they had Social Security but you are near 20 or just entering you know the workforce.
You Want to be as Self-sufficient
We might not have those options available for us okay those might not be there or you might have something like that but it really won't be enough to survive. I'm not saying this is gonna happen for a fact but this is just what it looks like but I have an article here talking about the pension crisis.
You know you want to be as self-sufficient as possible you want to be very active in your investments if you have a 401k you cannot name one thing that's in it that is not good and that's not okay.
I still love you but you've got to do better you want to be actively managing all your money not just money that's used on a day-to-day basis but the money that you intend on using in the future.
It's not enough to just set it and forget it hope and pray that's not enough I'm sorry. So keep on watching my articles I will keep you informed on everything that is going on in the economy and then you use that to make decisions based on your current financial situation.
*Please be sure to do your own due diligence before making ANY financial decisions. On my channel I share with you my research but please verify everything for yourself! I do not give investment advice, just share my thoughts and my choices!*
