Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:FDIC absolutely does cover runs on the bank.

They DID. I don't trust Musk et al with my money, do you? Do you remember the Silicon Valley bank near run two years ago? And that was with competent financial stewardship from the federal government. All bets are off.

I'm not telling you to take out your cash and put it in your mattress. But have a plan.

What would a plan look like? Genuinely asking.

Move some money abroad. Have a few thousand in cash, both in dollars and foreign currency. Store as much non perishable food as you can fit and afford.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:FDIC absolutely does cover runs on the bank.

They DID. I don't trust Musk et al with my money, do you? Do you remember the Silicon Valley bank near run two years ago? And that was with competent financial stewardship from the federal government. All bets are off.

I'm not telling you to take out your cash and put it in your mattress. But have a plan.

What would a plan look like? Genuinely asking.

Move some money abroad. Have a few thousand in cash, both in dollars and foreign currency. Store as much non perishable food as you can fit and afford.

How does a normal person (who doesn't have investment managers or tax lawyers and what have you) move some money abroad? Serious question.

Anonymous wrote:Another economist here, though I’m the wrong ‘type’ of economist in that I work in the food & ag sector.

1. I would not pay off a mortgage, assuming a fixed rate. If things get moderately bad, having the cash is useful. If things get crazy, and millions lose jobs/can’t make mortgage- well, the bank really doesn’t want your house. It’s an illiquid asset that then has to be maintained. I’d roll the dice that something can be worked out.

2. I would watch for the following as signals to really freak out: a)banks start buying and speculating in a significant way in crypto (derivatives), b)Congress allows them to do something insane like hold bank reserves in crypto. That is when I’ll be moving a good chunk my savings directly to a Swiss or maybe a British bank.

3. Can’t go wrong with some standard financial advice: working on lowering living expenses and having up to a year cash in liquid accounts. Pay down any variable rate debt ASAP- like credit cards.

4. Inflation- tough one. If inflation get s really bad, holding a lot of cash in USD means you watch your purchasing power erode- though interest rates at said banks would rise (presumably) . If there are big purchases anticipated in the coming year, maybe move those up if you can.

We got a lot of household items in bulk at Costco-not everyone has the spare cash to do this, or the space to store it. I’d say we have about a years supply of a lot of basics we use:toothpaste, laundry detergent, preferred shampoo (non perishables) etc. If the clowns don’t crash the economy, it’s all stuff we’ll use anyhow. If they do, it will cushion but not eliminate the blow to our wallet. *we did this over time, id still prioritize high interest debt and emergency funds over buying extra socks.

Anonymous wrote:Random but still worth considering. Move money out of accounts where you have had federal checks electronically deposited. Like refunds, retirement, or social security. Musk and his doge bros have that account info now. And could drain us all in one fell swoop

The FDIC is not supported by public funds; member banks' insurance dues are its primary source of funding.

The FDIC receives no funding from the federal budget. Instead it assesses premiums on each member and accumulates them in a Deposit Insurance Fund (DIF) that it uses to pay its operating costs and the depositors of failed banks.

FPYCparent wrote:Not going to claim that crazy things cannot/will not happen, but per https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation:

The FDIC is not supported by public funds; member banks' insurance dues are its primary source of funding.

...

The FDIC receives no funding from the federal budget. Instead it assesses premiums on each member and accumulates them in a Deposit Insurance Fund (DIF) that it uses to pay its operating costs and the depositors of failed banks.

Admittedly, I am NOT an economist and I cannot predict the future. However, I'd like to think we can agree on some facts to form the basis of an informed discussion.

Anonymous wrote:Things you should worry about:
1. Inflation
2. Unemployment
3. Democracy
4. Government services

Things you shouldn’t worry about:
1. Deposits under the insured limit.
2. Musk stealing money out of your bank account.
3. The stability of the US financial system.

Anonymous wrote:

Anonymous wrote:Another economist here, though I’m the wrong ‘type’ of economist in that I work in the food & ag sector.

1. I would not pay off a mortgage, assuming a fixed rate. If things get moderately bad, having the cash is useful. If things get crazy, and millions lose jobs/can’t make mortgage- well, the bank really doesn’t want your house. It’s an illiquid asset that then has to be maintained. I’d roll the dice that something can be worked out.

2. I would watch for the following as signals to really freak out: a)banks start buying and speculating in a significant way in crypto (derivatives), b)Congress allows them to do something insane like hold bank reserves in crypto. That is when I’ll be moving a good chunk my savings directly to a Swiss or maybe a British bank.

3. Can’t go wrong with some standard financial advice: working on lowering living expenses and having up to a year cash in liquid accounts. Pay down any variable rate debt ASAP- like credit cards.

4. Inflation- tough one. If inflation get s really bad, holding a lot of cash in USD means you watch your purchasing power erode- though interest rates at said banks would rise (presumably) . If there are big purchases anticipated in the coming year, maybe move those up if you can.

We got a lot of household items in bulk at Costco-not everyone has the spare cash to do this, or the space to store it. I’d say we have about a years supply of a lot of basics we use:toothpaste, laundry detergent, preferred shampoo (non perishables) etc. If the clowns don’t crash the economy, it’s all stuff we’ll use anyhow. If they do, it will cushion but not eliminate the blow to our wallet. *we did this over time, id still prioritize high interest debt and emergency funds over buying extra socks.

NP I'm actually very interested in your takes as an ag economist. What good product will be the hardest hit do you think? I'm very worried about crop failures and the price of meat.

My mom was an economist, I appreciate what you do (even if no one wants to listen to you).

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Another economist here, though I’m the wrong ‘type’ of economist in that I work in the food & ag sector.

1. I would not pay off a mortgage, assuming a fixed rate. If things get moderately bad, having the cash is useful. If things get crazy, and millions lose jobs/can’t make mortgage- well, the bank really doesn’t want your house. It’s an illiquid asset that then has to be maintained. I’d roll the dice that something can be worked out.

2. I would watch for the following as signals to really freak out: a)banks start buying and speculating in a significant way in crypto (derivatives), b)Congress allows them to do something insane like hold bank reserves in crypto. That is when I’ll be moving a good chunk my savings directly to a Swiss or maybe a British bank.

3. Can’t go wrong with some standard financial advice: working on lowering living expenses and having up to a year cash in liquid accounts. Pay down any variable rate debt ASAP- like credit cards.

4. Inflation- tough one. If inflation get s really bad, holding a lot of cash in USD means you watch your purchasing power erode- though interest rates at said banks would rise (presumably) . If there are big purchases anticipated in the coming year, maybe move those up if you can.

We got a lot of household items in bulk at Costco-not everyone has the spare cash to do this, or the space to store it. I’d say we have about a years supply of a lot of basics we use:toothpaste, laundry detergent, preferred shampoo (non perishables) etc. If the clowns don’t crash the economy, it’s all stuff we’ll use anyhow. If they do, it will cushion but not eliminate the blow to our wallet. *we did this over time, id still prioritize high interest debt and emergency funds over buying extra socks.

NP I'm actually very interested in your takes as an ag economist. What good product will be the hardest hit do you think? I'm very worried about crop failures and the price of meat.

My mom was an economist, I appreciate what you do (even if no one wants to listen to you).

Thanks! And, your question is a hard one. Our economies are all so intertwined. Also, it is very hard to anticipate what a madman is going to do in the future, or even COB today really. A few observations:
1. Food production runs on credit. Growers/producers are constantly borrowing money for equipment, seeds, etc. Then they pay it off at harvest and start the cycle over again. High interest rates hit them hard. But ag is traditionally one of the heaviest subsidized industries out there-some government program or another generally makes them whole--but they do go out of business all the time and the slack is picked up by those who remain. This time, with Elon running amok, who knows.

2. Ag depends on trade. My best advice here is, buying stuff in season is a better bet. Getting berries in the middle of winter means those are imported (likely from Mexico)--those are very vulnerable to tariffs. But the thing is, if you reduce supply (or increase the price of imported stuff) --it has a knock on effect on price even for the domestic market. Sorry to all the avocado, mango and coffee lovers--those are all imported. Just depends on which other countries the US slaps tariffs on. If the EU is next up for tariffs, expect rises in price for many processed foods/ingredients: chocolate, olive oil, sesame seed oil, the list goes on.

3. Meat: poultry is probably one the bright spots. Feed costs are way down, and barring widespread climate disasters or credit disasters (like really widespread--corn and soybeans are grown everywhere), chicken processors are doing just fine. Bird flu has hit egg layers, not broilers. Beef--mixed picture--cattle inventory is way down. US actually imports a lot of ground beef-from Australia mainly. US producers focus on higher value cuts of meat and we leave the low value hamburger meat to others. So it too is vulnerable to tariffs if those become more wide spread.

So, sorry--but this adminstration's policies are practically guaranteed to result in higher food prices across the board. But unless they do something breathtakingly dumb like default on US debt and freeze credit markets, or destroy the entire banking system, the supply chain will still be there. Give generously to your local food pantry--our neighbors who watch every dollar and/or depend on SNAP will be suffering.

Anonymous wrote:

FPYCparent wrote:Not going to claim that crazy things cannot/will not happen, but per https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation:

The FDIC is not supported by public funds; member banks' insurance dues are its primary source of funding.

...

The FDIC receives no funding from the federal budget. Instead it assesses premiums on each member and accumulates them in a Deposit Insurance Fund (DIF) that it uses to pay its operating costs and the depositors of failed banks.

Admittedly, I am NOT an economist and I cannot predict the future. However, I'd like to think we can agree on some facts to form the basis of an informed discussion.

Nobody is saying it's going to run out of funding, we're saying who knows what Musk and his boys plan on doing with it. What's to stop them from not paying out? What's to stop them from personally stealing the money?

Anonymous wrote:Things you should worry about:
1. Inflation
2. Unemployment
3. Democracy
4. Government services

Things you shouldn’t worry about:
1. Deposits under the insured limit.
2. Musk stealing money out of your bank account.
3. The stability of the US financial system.

Anonymous wrote:

Anonymous wrote:Things you should worry about:
1. Inflation
2. Unemployment
3. Democracy
4. Government services

Things you shouldn’t worry about:
1. Deposits under the insured limit.
2. Musk stealing money out of your bank account.
3. The stability of the US financial system.

Finally, some common sense.

Those looking at foreign bank accounts should know that deposit insurance limits are far higher in the US than in other jurisdictions.