After his article, Jake4Constitution offers practical advice the banks won't be sharing with you anytime soon. -SRB
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This is like driving off a cliff with no airbags.  My interpretation of the above is that when the banking system goes under, the blow will not be cushioned  whatsoever.


DERIVATIVES - THE HOUSE OF CARDS

I recently reviewed a few documents and want to share a few eye-openers concerning major US banks and derivatives. It may be helpful to read Parts 9-11 of my Money Matrix series starting with "The Money Matrix on "Credetary" Inflation and Deflation (PART 9/15)" if you do not have a good grasp of derivatives.

In the latest FDIC QBP report, they reported (p12/25) that 1,099 FDIC insured institutions, hold $201 Trillion in derivatives as of December 31, 2008 with just $7.1 Trillion (in OUR savings) backing these up.

Let's take a close look at Citigroup. On their latest March 31 quarterly (p4/33), they claim assets of $1,823 Billion. If my meager brain is reading the table properly, they only have cash and deposits amounting to $190 Billion Also, Citigroup lost almost $32 Billion in loans just for the quarter, and from the historical, this is only continuing to worsen. Then, as seen here, Citigroup holds $31,887 Billion in notional value in derivatives. Doesn't the latest bailout on November 24 for $20 billion capital injection and the $305-or-so billion guarantee for "toxic" assets now seem like a drop in the bucket?  Doesn't the Obama stimulus plan of around $800 Billion seem like a drop in the bucket?  (PS - It won't work anyways, as I explained in "The Oath of Obama, Why His Stimulus Plan Will Fail and What to Do Instead".)

WHAT CAN YOU DO?

After all my research and in my last seven bank closure articles, I no longer hesitate to hand out advice.  The banking system is falling apart and cannot be propped up. Therefore, each of us must become our own private bank.  This does not mean to stop usage of the current banks completely, but caution must be utilized in their use.

And since I've painted a bleak picture it's a little senseless to not share what I think are good ideas. Otherwise I would seem a bit like Chicken Little running around with his head cut off, so here you go! (Please remember I am just an engineer and certainly fallible.)  Take a look and decide for yourself, I actually view the below as conservative advice for most Americans.  Remember, this is not a time to be apathetic and just mull around, it is time to be realistic, do some research and take action if necessary. Please protect yourself and your family.

1. First know if your bank(s) or credit unions are FDIC/NCUA insured or not. If not, get your money and close the account ASAP as it is a sign that the FDIC probably refused to insure it.  If yes, you can read the FDIC rules here, the NCUA rules here, and see if any of the exceptions or limits apply to your family.
2. Second, consider moving your money to multiple banks or credit unions in the event one would fail.  Diversify your risk. At any bank, you can request their financial statement and check out the status of their loans and deposits. You can check the financial statement of all federal credit unions here. In general, credit unions will be safer than larger banks, mainly since its loans are limited to only the union members, but please be careful. Large banks like Bank of America, Wells Fargo, Citibank, Wachovia, etc. loan out to a wide range of borrowers (both individual and commercial), which are subject to failure due to the housing crisis.  A small, private, local bank which has not partaken in the mortgage bubble would certainly be the ideal solution.
3. Third, withdraw enough currency to cover expenses for AT LEAST 6 months. I view this as a prudent move to survive any financial system fall-out.  My reasoning for this is that even if all of your money is "deposit insured," if the bank fails, there is no guarantee you will get your money immediately. It may take months. If you decide to do this, it is best to also request small bills ($20 or smaller) as if a crisis develops larger denominations some vendors may have issues with handling $50 or $100 bills. Instead of paper money, I advise taking out nickels as the worth of the metal (75% copper and 25% nickel) is by far worth the closest to face value, whereas the paper money has no value in its cotton/linen form. It's also fairly amusing and trust me, it will take a thief quite a while to lug out several thousand dollars in nickels.
4. Educate yourself and others on economics and that once-boring subject of monetary policy.  My analysis in the Money Matrix series is that (price) deflation or inflation are both possible in the short-term as too little information is known about the $684+ Trillion of "dark" OTC derivatives.  I highly recommend checking out GATA's work on manipulation of the gold market and this 5-part series on how the gold and silver markets trade "The End for the Dollar and all Fiat Currencies (1/5)".  Quite possibly a mass psychology event such as hyperinflation is in store longer-term as well, as I surmised here "Calling All Wheelbarrows: Hyperinflation in America? (Part 2/2)".
5. Try reading my Money Matrix series below. Decide for yourself what to do to protect your family's financial well-being. I also highly recommend the well-informed monetary policy articles from fellow Nolan Chart columnist Republicae.
6. Take a solid look at changing your cash into physical gold and also silver. Some people will tell you this will make you rich as well; this is possible but I do not necessarily agree.  My idea is to survive and maintain purchasing power in case hyperinflation occurs. Most of the alarmists recommend holding 25-50% of your savings in gold. I also recommend holding physical silver, preferably in the form of "junk" silver or American Silver Eagles. Please do as you like after researching, but in my humble opinion holding none or <5% of your net assets in gold is not very intelligent. It is my researched understanding that the markets are manipulated, and as such the metal prices can fluctuate, even drop precipitously.  However, one troy ounce of gold today is still one troy ounce of gold tomorrow. A dollar bill is also a dollar bill the next day, but the purchasing power of the paper fluctuates madly, and its just a piece of paper that has no intrinsic worth.
7. If you decide to purchase gold and silver, visit a US Mint authorized dealer near you and buy Silver or Gold 1oz. American Eagles, or "junk" silver, aka "bag silver." 'Bag Silver' are 1964-and-earlier silver coins (Halves, Quarters, Dimes) that are 90% silver by mass. For the troy ounce (31.1 grams) they will be about the spot price of silver and so will be cheaper than Silver Eagles. (The easiest way to remember this is that $1 of Face Value = approx 0.725 TOz silver, but it is typically sold at 0.715 TOz to account for wear and tear.)  These days, all coins are trading at high premiums to spot value but bargains can yet be found in 1942-1945 silver war nickels, 40% silver-clad 1965-1969 Kennedy halves, etc.  If you have enough funds to purchase 5,000 ounces of silver or 400 ounces of gold, you are 1) much richer than I am and 2) should work through a trader to take physical metal off the COMEX exchange. Read up and decide where to store it - thieves visiting my home won't find any silver and gold, but appropriate locations will vary from person to person. I do recommend diversifying and using multiple locations for your metal.
8. If you hold US Treasury debt in the form of saving bonds or Treasuries, cash them out for physical cash and coin.  While Treasuries may preserve the nominal dollar amount, think purchasing power. However, sovereign default (or practical default, such as changing the terms of the bonds to, say, a perpetual 2% dividend) is certainly possible.
9. Likewise, have a stock of non-perishable canned foods, water, and other essentials. I recommend this for two reasons. 1) No Americans, including myself, fully appreciate the shocking, disorienting speed at which hyperinflation can hit. Unfortunately, our government has been priming the pump for exactly this to happen. (Remember I wrote this when they want to "save" us again.) and 2) Based on US and world food stock levels and the low prospects for increasing strength in the dollar, it makes financial sense to purchase now and hold for consumption in the future.
10. Exercise your Second Amendment privilege and peacefully bear arms.
11. Start a Victory-over-Congress-and-the-FED garden. 
12. Cut, cut, cut all unnecessary spending.  In the coming years, one of the lessons it may teach to us (for our benefit) is that you do not need money to be happy.
13. Get to know your neighbors, and, if for some reason you haven't yet, your family. The more the merrier, there is still hope.  My hope is not a short-term one, it is long-term, for our children of today and to protect the lives of our parents.  I believe that once the current manner of government interventions is accepted as false and nonsensical, the recovery will be much swifter than any would dream.   
14. Last, spread the word.  For obvious reasons, you won't find this advice from the mainstream media.  Join organizations such as the Campaign for Liberty, End the FED, and Young Americans for Liberty.  My fellow Americans, the worst storms have yet to arrive, but know there is hope and a bright future waiting for us - if we dare to choose it. 

WHAT IS THE FUTURE?

Modern central bankers are being assaulted by their own Frankenstein creation, fiat money.  Is it any wonder that conditions in places such as Africa have changed very little over the past half-century?  The chained people of this earth are falling in battle, caused to a strong degree by the "Money Powers," the FED, BIS, IMF and other central bankers.  25,000 dead each day due to hunger and economic suppression when the War of Terror military funding could have fed, clothed, and sheltered each and every one. 7,328,200+ Americans are already imprisoned or on parole, many unjustly, by our "legal" system.  Every American who works has her/his wages stolen by the IRS to the tune of $1.2 Trillion in 2008 as I described in "Thank You for Paying Your "Voluntary" Income Tax! Love, The IRS".   Sure pales in comparison to the Trillions spent in bailouts so far, eh?  Many other Americans will struggle as well, but the end overall economic result is likely just a severe  (and temporary) drop in living standards.  Although, in my final analysis and worldview, our world leaders are clearly embarking us on a path to endless war, this is most likely completely accidental. 

At any rate, the clueless or corrupt politicians in Washington have chosen their comrades - and they are the Banksters, not We the People.  This did not start yesterday, or even in the last decade.  The US has not had free markets for at least 90 years.  We have been living in the Age of Marx and Keynes, and it is now time to move on.

A final victory for honest money will one day arrive, despite the efforts of the sad command & control governments and central banker allies that rule this planet today.

END THE FED!  Restore the Constitutional Republic!

Jake, the Champion of the Constitution

[Reach the Author Here!]      www.CampaignForLiberty.com         www.EndTheFED.us