Banks have grown far too large… depositors too complacent.
This can’t continue forever.
So, we wanted to ask the question… What if we allowed banks to fail?
As we explored this idea in great detail, we quickly realized it would lead to the greatest opportunity to unlock value for the average individual in history.
And that scares Washington.
Allowing free markets to work would upend everything they know and hold dear.
- No more lobbyists pushing rules to protect corporate profits.
- All the money and time saved from cutting out bureaucratic oversight.
- New opportunities in cryptocurrencies and fintech beyond anything we’ve seen so far.
And that’s just the start.
All this might sound like a pipe dream, but it’s much closer than most of you realize.
It’s our job to prepare you for this eventuality by helping you navigate a tumultuous future and capitalize on opportunities that put the pandemic lows to shame.
The Spark That Lit the Fire
No individual embodies liberal ideals better than the comedian Jon Stewart.
To be fair, the former Daily Show host is one of the more reasonable voices in a sea of deafening stupidity.
And frankly, we’d question if the Democratic Party would still accept him today.
But it’s a recent clip from his Apple T.V. series The Problem With Jon Stewart that caught our attention.
It’s been making the rounds on Twitter (or X, as it’s now called).
The short clip takes corporate bailouts to task, and rightfully so.
He points out hypocrisy, especially amongst banks, when the government prevents their failure but allows them to pass profits to their shareholders.
“[Corporations] socialize their losses and privatize their gains.”
There aren’t many places that draw bipartisan anger like the financial sector.
Everyone knows Wall Street plays by a different set of rules — ones they abuse for profit without consequence.
The philosophical difference between the parties is one of tactics.
Liberals want heavier government involvement and regulatory framework to keep banks in line.
Unfortunately, we have seen where that gets us. Silicon Valley Bank abided by every statute and still found a way to put itself over its skis. Greed will find a way to worm through any system no matter how large, while suppressing true market potential.
The left gives bureaucrats the power to save these institutions and then acts surprised when they abuse it.
So, what would a world without bailouts and more free market control look like?
The Initial Pain
Let’s first explore what would happen if we wiped out the Federal Deposit Insurance Corporation (FDIC) and insurance protection.
It’s unlikely people would simply pull their money out of the banks because… well… where would you put it?
What we’d likely see is banks reverting to a system backed by assets like gold, much as it had been before the modern era.
Depositors would choose institutions who could provide a clear risk assessment of the bank’s holdings.
In turn, the average individual would become far more aware and educated about the financial system.
If we didn’t see similar moves abroad, it’s quite likely money would flow out of the United States to safe harbors like Japan or the European Union, at least initially.
There would certainly be some short-term pain, with high net-worth individuals needing to diversify their holdings in favor of owning less risky assets.
Plus, there would be a contraction in credit as lending standards increased. Many smaller banks would fold or limit the number of depositors they allowed.
This might sound far-fetched. However, given the Federal Reserve’s recent abuse of power, people want to reign in government involvement.
So, it’s very possible we see things start at least traveling down this road.
What would the end game look like?
The dollar and other government-backed fiat currencies wouldn’t just disappear. They’re too entrenched, and people trust them.
However, like gold, dollars don’t have much utility in the real world. We can’t eat dollars to stay alive, and gold isn’t a great metal for much of anything.
Decentralized currencies would likely gain a stronger foothold since their utility is based entirely on users’ acceptance.
And when you have a choice between dollars, gold and Bitcoin, in this new environment, the lower transaction costs and simplicity of Bitcoin makes a lot more sense.
We’d also see banks range in credit quality and facility.
You’d have an opportunity to deposit your money at a behemoth bank that won’t pay you a nickel for your deposits, but isn’t likely to lose it either.
Or you could choose a riskier bank that might pay you above market interest to gain access to your money.
What’s almost guaranteed is that the government would have less power and involvement, along with not having to bear the costs associated with managing the financial system.
And while some would argue dissolving our current system would lead to chaos, we believe a true free market would create MORE STABLE economic cycles as businesses and capital can adjust faster on their own.
Where Does That Leave Us?
None of us are likely to see that nirvana in our lifetime.
But we cannot and must not continue down this path of government expansion. It’s unsustainable.
The transitions will be slow and incremental, each injecting a fresh round of volatility into the market.
That’s why it’s critical to analyze investments within a political and economic framework.
And that is Dr. Mark Skousen’s specialty.
You won’t find him on MSNBC anytime soon.
Dr. Skousen is a voracious reader and a key intellect on government and economic policy.
His years of research steeped in the likes of Adam Smith and Austrian economics help him not only see what’s happening now and where we can go…
…But how to CAPITALIZE in the near-term?
What does that look like?