Moveyourmoney.info is apparently a grassroots movement to inspire people to withdraw their savings from the powerful mega-banks and to deposit it in local institutions. The premise is that the big boys blew the bubble and that the little guys sat out the craziness.

It is true that the largest banks are some of the highest-leveraged, that they have benefitted the most from government and central bank actions, and that many of their executives are nefarious bastards, but it is by no means a given that community banks are safer. In fact, these are being put down by the FDIC at the rate of several a week (the announcements come out late on Fridays). Check out this list of Texas ratios here before deciding to trust any bank. It is just the nature of fractional reserve lending that virtually all modern banks operate from the get-go in a state of insolvency, since they lend out money that they do not have. This is the very source of the inflation/deflation (or “boom-bust” or “business”) cycle.

It is not right, but certain institutions like JP Morgan will be the very last to disappear, since the government and Federal Reserve were created by big banks, for big banks. In fact, I would consider JP Morgan to be the safest place to stash cash in the US aside from a Treasury-only money market fund or Treasury Direct. If JP Morgan goes under, that means the government won’t be far behind. Don’t hold your breath. Anyway, this video makes for good holiday viewing:

-

For more on fractional reserve lending, central banks and moral hazard see:

In praise of bank runs; the only regulator we need

A crash course on the banking cartel

Greenspan was framed! Blame bankers’ moral hazard, not their lackey.