News Updates 4 U: alternatives

Sunday, April 14, 2013

Five Alternatives to FDIC "Insured Deposits"

In the wake of capital controls in Cyprus and statements by the Dutch finance minister Jereon Dijsselbloem that brought into question the entire notion of deposit insurance in the eurozone, readers are wondering where to safely keep their money.

Concerns heightened when people discovered New Zealand banks have no insurance (see Fraudulent Guarantees; Fictional Reserve Lending; Comparison of US to Cyprus; What About New Zealand?).

Reader Sam asks …

Hey Mish
What alternatives to “FDIC insured deposits” are out there so we can protect our money?

I’m a daily huge fan and thanks for all your wonderful work.
Sam P

In the US, I do believe deposit insurance will be honored, but it shouldn’t be, at least on interest bearing accounts. And the only way deposit insurance could realistically work on non-interest bearing accounts was if there were regulations that banks could not lend deposits available on demand (checking accounts).

Keeping money under the mattress is one obvious answer, but not one that I recommend. Here are some better choices to consider.

Five FDIC Alternatives

Treasury Direct: You can safely buy short-term US treasuries directly.

Short-Term Treasury Funds: The iShares Short Treasury Bond ETF (SHV) holds Short-term U.S. Treasury bonds with remaining maturities between 0 and 1 year.

Brokerage account at places that hold excess cash in treasuries. Not all brokerages hold client cash safely. Interactive Brokers is one of the better ones in my opinion. ETrade nearly went under because of risks it took. See E*Trade Heads For Bankruptcy?

Physical gold or silver in your possession

GoldMoney, Bullion Vault, and other places that store precious metals for you.

I prefer GoldMoney to other precious metal holding companies but that is an admittedly biased opinion as I have a relationship with them. Anyone wanting additional information on GoldMoney: Please Email Mish

Again, I do believe deposit insurance will be honored, whether or not it should be, but you certainly do not want to exceed the FDIC limit at any one bank.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mish’s Global Economic Trend Analysis

Five Alternatives to FDIC "Insured Deposits"

Saturday, March 16, 2013

Obama: Spend oil money on alternatives to oil

President Obama wants cars and trucks that don’t need oil to run. Today he proposed a fund to help make that happen, a fund with a $ 2 billion price tag. Which sounds like a lot, at least until you put it in context.

For one, it’s spread out over the next decade, so we’re talking about $ 200 million each year. And, the pool it’d be pulled from, the royalty revenue from offshore oil and gas drilling, was more than $ 5 billion last year. So, less than 4 percent.

The White House estimates those revenues will increase over the next several years. Which, Andy Radford, from the American Petroleum Institute, believes is likely. For one, he says, you’ve got rising prices. And, says Radford, “we’ve had some major discoveries in offshore that have been coming on line.” The more oil and gas that gets pumped, and the more it costs, the more the government takes in through the royalty program.

But why spend that extra cash on creating cleaner cars and trucks? Everyone in D.C. is talking about deficit reduction. Why not use it for that?

William Galston from the Brookings Institution says developing alternatives to oil is a public good, and “economists agree that there are certain kinds of what they call public goods that the market left to its own devices won’t supply enough of.”