Stash The Cash

The following is an excerpt from SafeHaven.com

Bold is my emphasis

Printing Money to Avoid Immediate Banking Collapse

"According to the Federal Reserve Board website, U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month. We have been discussing this with Sitka Pacific Capital's Mike 'Mish' Shedlock for the last two weeks. He concludes: "Banks in aggregate have now burnt through all of their capital and are forced to borrow reserves from the Fed in order to keep lending." Simply put, the U.S. banking system has no reserves. In addition, the FDIC has recently begun modernizing large-bank insurance rules. We hope this is a wake-up call to everyone as to the extent of the credit crisis. Bank account balances should be used only for transactions. Instead cash should be held in the form of U.S. Treasury Bills at a conservative brokerage or trust. Under the mattress is also perfectly acceptable (your parents or grandparents had to do it!). For investors, we advised last year to sell the banks. Banks will be soon forced to sell assets (yes, even 10 year Treasury Bonds) at deeply discounted prices to pay depositors."

These guys are actually recommending that you keep all your money in either CASH in your house, or by short term treasuries. Only use a bank account to pay your bills, i.e. checks or card transactions.

Also, pay attention to the first part...

"U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month."

This is an actual Federal Reserve statistic, and is quite alarming. What this means is that in the entire federal banking system, according to the Federal Reserve, banks ONLY HAVE 199 MILLION of "cash". Banks are required to keep a percentage of their assets as "reserves" which used to mean actual cash in the vault so that in the event of a run on the bank they have money to hand out to their depositors. The Fed regulates this percentage and it varies (slightly) day to day. If a bank does not have the required reserves, it must borrow them by either going to another bank (the overnite, or fed funds rate) or borrowing directly from the Fed. (the discount rate).

The fact that the entire banking system has now borrowed over 90 percent of it's reserve requirements from the Fed or other banks is absolutely Orwellian. It signifies more than a credit crunch. What it means is that the banking system is currently damn near out of money.

This is NOT a good sign. This is bad bad bad. I am seriously considering the mattress cash.