Are Many of the World’s Biggest Banks Marching Towards Failure?

his past week you have continued to hear disturbing news from one of the world’s great, powerful, and important banks Deutsche Bank that their finances have continued to deteriorate. A more honest appraisal of their situation would be to say that they have gone from bad to worse. Sadly, this is not only true of Deutsche Bank which is in trouble, but for many, many globally and systemically critical banks around the G7 nations (and other trillion dollar economies) such as Germany’s Deutsche Bank, UniCredito Bank and many others in Italy, Banco Santander and others in Spain, and the list goes on for other countries as well (think Turkey, Argentina, Venezuela, Brazil, Indonesia, and Portugal).

This is why you need to a Regal IRA to protect your retirement portfolio. The banking system of the United States, Europe, and the entire world today is basically unsound. Gold offers insurance and protection during market turbulence, as it has done so effectively for all of recorded human history. Today is the day to learn what assets go in a Regal IRA.

The Origins of Money and Banking Today

Most people have no idea what is really going on behind the scenes with banking nowadays. The world today is based on banking from the Middle Ages that is no longer so safe and sound as it once was. Modern day banks came from the goldsmith trade from the Medieval world. Managing a gold smith business back in the day meant that you had to be able to store gold safely and securely. From this point on, producing and storing gold morphed into storing, loaning out, and borrowing gold. Banks did not begin with paper money at all.

The majority of individuals today do not know that as recently as the 1930’s, the pubic would use and spend gold coins in their everyday lives. Besides this, the majority of national currencies were backed by gold. There was a standard conversion rate between these currencies and gold, such as with Pound Sterling the British money (which originally was convertible for literally a pound of sterling silver per British pound) and with the United States dollar ($20 came in a twenty dollar gold piece, that was a standardized gold ounce in the 1800’s through the Great Depression).

Banks were in the business of storing, loaning, and borrowing gold coins as their main business. This all began to change with the invention of demand deposits. These were different from time deposits in that now the customer could demand his or her deposit whenever desired. This soon formed the underlying basis of modern checking accounts. Banks did not have to pay interest on their customer deposits any longer as they claimed that they could never utilize them.

The rules of the banking game were clear still. Honorable bankers did not loan out customers’ money. They were storing it and giving out gold deposit receipts that you know as banknotes. Governments would also issue banknotes, and they called these currency. Money for transacting included gold coins, gold bullion, individual banks’ banknotes, and government currency. A strict limitation to the amount of physically available gold (hence the name “The Gold Standard”) kept everyone in the system honest. This included both governments with their currency issuing and banks with their banknotes.

Central Banks Have Messed Up Banking and Doomed Many of Today’s Banks

What changed and fundamentally altered the system, causing banks to become fundamentally unsound and even dare we say crooked? The arrival of interfering central banks on the scene was the catalyst that ruined a once-honorable profession and industry. It is no exaggeration to say that central banks dominating the entire financial system destroyed the stability of it.

Yet it is hard to imagine a world without them today. Central banks purchase government-issued debt. This means that the nation can pay for many activities without having to actually rely on taxes. You might think that the governments of the West have finally figured out how they can have their cake and eat it too. The truth is they are merely using a modern from of the ancient government duplicitous art of currency debasement. What is more, this is only a basically one hundred year old practice. The United States Federal Reserve system only arose in 1913.

Thanks to the Fed and other activist central banks, the governments of the world were able to become the bankers of last resort to once mostly honest banks. Now the banker could loan out money he was not supposed to part with as if it were merely his own personal capital. This spelled trouble for the stability of banks the world over, as they quickly all got into the unscrupulous practices of loaning out someone else’s money, paying out practically no interest on it, charging interest for others to use it, and screaming for government help when their loans went toxic.

How it All Evolved into the Fractional Reserve System

It is worth remembering too that as banks crafted huge amounts of currency out of the air, in the past clients learned of this somehow. Bank runs ensued. Thanks to central banks telling all of the banks they should do this, it took away the checks and balances supplied by good honest fear of having bank runs.

Finally it all morphed into the now-infamous but still utilized the world over “fractional reserve” banking system. This allows for banks to make far more money than any other honest industry. In good times they can loan money out on deposits, then receive it back as another deposit, then loan it out again. They only have to keep a fraction of their demand deposits as reserves.

In bad times, the numbers of loans they make can quickly turn into a sea of falling dominoes. You might honestly call fractional reserve banking the world’s first legal Ponzi Scheme. And supporting it all with the official reserve requirement is the central bank of the nation that sets them, such as the Federal Reserve, the Bank of England, and the European Central Bank.

The Fractional Reserve Banking System is the Final Death Knell for Many of Today’s Banks in Europe and the United States

Law is now what safeguards banks and stops “runs on the banks.” The government in the U.S. supports this by the FDIC Federal Deposit Insurance Corporation. Depositors originally had $2,500 worth of secure deposits per institution. Today that amounts to $250,000. In the European Union the state guarantees €100,000. This chart shows how much European national banks are in need of such help:

Here is where it gets shadier and more dangerous still for the American banking system. Thanks to the FDIC in the U.S., $25 billion in deposits is fully covered by actual paper money. Yet the financial institutions that this covers possess $9.3 trillion in money on their computer screens. It means the next big financial crisis could easily lead to a run on the FDIC, a truly dangerous idea.

The only way they could bail out this monstrous Ponzi Scheme at that point would be to print as much as $9 trillion in new dollars. That has been tried already by such success stories as Venezuela, Argentina, and Zimbabwe. They call the end-result hyperinflation.

Gold Is Your Best Weapon of Choice to Safeguard Your Retirement Portfolio

This is why you have to do something to protect your retirement accounts from the imminent failure of major financial institutions from Europe to the United States. Even if we do not see another Global Financial Crisis that many believe is inevitable, it would take a massive inflation-causing money printing round to stop the collapse of such financial institutions around the world as Deutsche Bank, UniCredito, Royal Bank of Scotland, and Banco Santander to name just a few.

Now is the time to figure out the protection for your nest egg, starting with storage. Remember that avoiding scams like the current banking system is critical to ensuring your retirement assets will be there one day when you need them.

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