Control the Banking Function

Do you remember one of the biggest USA financial headlines in March 2023?

I do, because it is something I personally try to educate others about on a regular basis. There was a run on the Silicon Valley Bank, and thousands of medium to small businesses were at risk of losing everything.

Billions of dollars were frozen within a matter of hours. If you were not quick enough to transfer funds to another account, or you didn’t have another account, your business was at risk of an immediate and fatal ending. How could this happen? The power of suggestion and something called fractional reserve lending.

First let’s examine fractional reserve lending. The system we all sign up for when we deposit our money with any… yes ANY… bank is that we legally let go of our money and it doesn’t have to be returned. This includes our checking and savings accounts. We legally allow the bank to lend our deposited funds for a profit.

Until 2020, banks were required to leave 10% on reserve. For example, let’s say you deposit $10,000, and I need a loan for $9,000. The bank will keep $1,000 on reserve. I then deposit my loaned $9,000 back into the same bank. Guess what? The bank can then loan out 90%, and the system repeats. A fraction of what was originally deposited is actually available if needed.

During the pandemic the rules changed. Banks were allowed to maintain 0% on reserve for what is on deposit. 

What happens if all the depositors want their money back? Banks literally bank on this not happening. What happens if lots of depositors suddenly lose confidence about the availability of their deposits? This is called a run on the bank.

Rumors are powerful financial weapons. This happened with Silicone Valley Bank. The connect start-up world suddenly panicked and realized they needed to transfer funds fast.

Since the year 2000, over 500 US banks have gone bankrupt- simply google the FDIC bankruptcy list to view the details for yourself. 

The general rebuttal at this point is “yes, but deposits are FIDC insured.” That is true; up to $250,000. But how many start-up tech companies cash flow more than this each month? How many rentals do you need before you cash flow more than this?

Would your small to medium business be at risk if all your funds were suddenly frozen until another bank purchased your bank or the Congress passed a bail out? 

We have been led to believe that banks are the safest place to store our money. Human nature, and the laws of physics, say that we will remain at rest or not change our behavior, until pain (or a force) causes us to modify our habits. However, wisdom says to make changes before we pay the consequences of inaction. 

Becoming educated on and implementing the Infinite Banking Concept (IBC) is one of the best ways to protect yourself, your family, and your assets. The system uses one of the most secure and unused tools available in the financial world. This requires an IBC specialist to ensure the principles and procedures are properly established. 

If you are interested in beginning the education process so you are not a victim of the next bank freeze, schedule a consolation today. We love educating others on alternative financial tools. 

Olivia McGraw: omcgraw@unbridledwealth.com

Jason K. Powers: jpowers@unbridledwealth.com