The FDIC is Great at Satire


March 30, 2020

My Dear Reader,

Do you ever feel like comedy can sometimes be prophetic?  I recall a joke from South Park that they told just after the bp oil spill, where the CEO at the time Tony Hayward, repeated the phrase “We’re sorry” over and over again in varying ways.  The exaggerated ads were humorous at the time because BP had just spilled untold amounts of oil all over the gulf of Mexico and the best they could do was cut an ad that said “We’re sorry”, and throw up their hands. So when the FDIC put out a similar video this week to tell people to keep their money in the banks, I couldn’t help but think of BP’s apology video.

One of the problems with modern banking is undoubtedly our reliance on the mandrake mechanism, and the issue will only be compounded by the lack of a gold standard and the recent stimulus package. Leverage and borrowing have always been how banks made money, and there’s nothing wrong with that but when the currency is only valued based on the fact that it exists within itself, inflation and rapid inflation becomes the consequence.  In fact, it could be said that the modern American dollar is a derivative in and of itself, where real value is skewed and the only people hurt are those who need the most help. It really is a modern wonder to think that every dollar in the 10 trillion dollars worth of reserves has been loaned out 8 to 18 times, and at some point, that debt is going to need to be called. That’s what makes this stimulus so dangerous. Because of the quantitative easing measures put in place by the Fed, banks are going to be able to take on much more debt, but that also increases their reliance on cash reserves. 

So when the FDIC asks you in a comedic video to keep your money in the bank, it has very little to do with you and the .000001% interest rate they give you, but rather, the cash reserves must remain stable for the house of cards to stand.

To your creation and potential,

Kevin Prendiville