Have you ever looked at the forms and hoops to jump through to actually collect on FDIC insurance? It is quite involved.

What happens in "normal" times is no one ever has to fill out any forms. The regulators close up the bankrupt bank, find another bank to take over the good assets and deposit accounts, liquidate or some how take care of the debts and bad assets and the bank re-opens the next day under a new name but no depositor ever knows the difference or skips a beat in their account.

That is what has been happening. Somehow if the SHTF my guess is suddenly everyone would need to fill out all those forms and wait for their money.

I guess on the good side of the equation is we have a central banker that is going to make sure that never happens. The Fed has promised to print plenty of money in whatever quantity is needed to satisfy the needs of any "run" on a bank or any other liquidity problem. So I don't think in any of the near term there is anything to worry about getting the nominal value of your insured accounts. The Fed will just print up whatever is needed and if it is a "cash" run they will physically print up FRN's and fly them to the affected banking region. They have done it before.  So that part I don't think we have to worry about like Cyprus or Greece does.

See Cyprus or Greece or Italy or any of the others don't have a printing press. They wish they did but they don't. But the Euro does. And they are using it as freely as they can get by with it and the northern more prosperous parts will put up with. The whole problem is while the Eurocrats would very much like to use the printing press and print these minor blips away, the Germans, Dutch and a few others that have somewhat run a tighter ship know full well that when the printing presses run to bail out the south that it dilutes and devalues their purchasing power. That is where the whole rub is. Germany has experienced hyperinflation more recently  than others and knows and remembers what creating excess money diluting the existing supply does. The Germans know that every bail out via printing new Euros to pay for it is coming out of their pocket via debasement of the Euro's they holding. The only reason they put up with it at all is that their Bundesbank holds a pot load of European sovereign debt and their banking system will implode if some of the weak states go down the tubes. So they are kind of in a position of damned if they do and damned if they don't.

Here in the US where we have a union and one part of the country is liable for the folly of any other part of the US, when we print any one holding US dollars pays for the bail out via less purchasing power of their money. It is just that the deflation we are in has been masking the inflation the Fed has been creating. Some day that mask will come off, velocity will pick up, and suddenly we will go from one or two percent inflation to having goods and services we need to live going up ten or twenty percent a year. Of course the Fed can claim victory because enough assets will still be in the dumps to offset it so on balance they can say there is no inflation. That is where we are at now, it will just get lots worse.

So like I said the good part of the equation is we have a printing press and don't have much to worry about concerning lack of insurance or bank runs. The bad part of the equation is we have a printing press and we can destroy any value in the money we use to pay our bills and eventually confidence in its use can be lost. So our dangerous part comes at some point where the rest of the world quits looking at us like a safe haven and people both domestic and foreign start worrying about the dollar holding its value. When will that happen? Damned if I know, but history shows when it happens it happens fast (within a few months) and generally catches the vast majority of the people flat footed. It could be months or it could be years from now. And hopefully it will not come at all but we CAN NOT continue to run big government deficit spending and pay for it via the printing press. If we do, history shows it ALWAYS ends up in the same place. We will not be an exception.

In my opinion.

John