There are many companies which sell insurance. Insurance for your car, home, or any possible liability you may incur. Insurance companies are rigidly regulated by governments at federal, state and even locally in some cases. Insurance companies must prove that they have assets to cover claims, and even huge claims resulting from fires, earthquakes, fraud, or a host of other possibilities. Many insurance companies refuse to insure certain people, or even states, if the risk is too high. Actually, the insurance industry is one of the richest conglomerations in the world, because they have to be able to satisfy claims presented to them by their insured. AIG, was one of the biggest, and it was nearly bankrupted in 2008 by the bundling of worthless mortgages, and selling them to the unwary. They barely made it.
The FDIC is the “Federal Deposit Insurance Corp,” which is an insurance outfit run by the federal government, and is supposed to give protection to bank customers in case of a bank’s failure. In other words it insures dollars deposited in a bank. The FDIC was started by FDR in March of 1933, long after there were thousands of bank closures. My parents lost their deposits in a bank they used. The FDIC has been used many times when banks have failed, and paid depositors their money, or should I say ‘dollars.’ The original dollar was supposed to be backed by .7735 ounces of silver, which based on Friday’s spot price, would make the dollar contain $11.81 worth of silver, but since the buck is no longer backed by anything, we might as well forget a valuable dollar.
Close to 40 years ago, when I wrote “I Hold These Truths,” I did a check to see how much of a reserve the FDIC had, and for each hundred dollars worth of ‘insurance’ they had about a nickel in their account. Not a very good insurance operation, is it? Next time you visit your bank, note the proud sign which is always visible to give assurance to those who might question a bank’s solvency. It informs one and all that the bank is covered and insured by the FDIC. With a nickel reserve for every $100 worth of coverage. You’d better hope that your auto, home, or medical insurance companies have a lot more reserves than does the FDIC.
There have been major bank failures since 1933, and the FDIC has always come through. How? By sending armored cars to failed banks to pay off the depositors with new paper money. The dollar is merely a printed piece of paper, and when needed, the presses can run off as much as is needed, with no worries about ‘reserves’ or any such minor thing as that. Many people think that they will never see their Social Security checks when they become old enough to receive them, since that account has no reserves at all, and the money deducted from your pay check goes right into the general fund. The do keep books about Social Security deposits, payments eligibility, etc, but it’s just as fake as the dollar. Social Security and Medicaid etc. will all go broke in some future year, but don’t be alarmed, because they can run the presses without fear of being arrested for counterfeiting, as you would if you ran a dollar press. The more they print, the less they will buy.
All U.S. government insurance, Social Security, Food Stamps, foreign aid, welfare, etc, is like a huge fairy tale. The U.S. government is committed to pay over $175 trillion in future years, and currently the debt is over $22 trillion. None are payable in anything other than un-backed paper money or computer entries. We, the public are the victims who must use the dollars for receipts and expenditures. The government wins and we lose UNLESS we try to protect ourselves with our own insurance. Stott’s rule is, “The More of Anything There is, the Less They Will Be Worth,” and this includes everything. I mean everything, and of course this includes dollars. In my 85 years, the buck has lost close to 90% of its purchasing power. As a kid, I thought nothing was abnormal when I bought a Coke for a nickel, my dad bought a new Plymouth for $600, and there was a penny pinball machine at Doc Alcorn’s store. My 1941 Plymouth truck which was bought brand new in Silverton Colorado by Mountain States Telephone and Telegraph Co for $400, I am sure was a competitive price, and was undoubtedly bid against Chevy and Ford. Nothing unusual there. It happens so gradually, that we don’t seem to notice. You can spend $75,000 for a new pickup now, the gasoline I bought for 19 cents a gallon, now is 14 times higher at $2.75. Oh Yes, and for a hundred years, gold was $20.67 and silver $1.25. It wasn’t unusual. The point is very simple. Save in gold and silver, not dollars or dollar denominated devices. Got it? don@coloradogold.com