jhogue wrote: ↑
Sun Nov 27, 2022 8:31 am
To get a higher yield you have to accept more risk. And anybody who is eager to leave their cash with Citibank would do well to first read up on its history in the stock market crash of 1929 (ever heard of Charlie Mitchell?) and, more recently, the financial crisis of 2007-2009 that forced a re-structuring of the "too big to fail" US banks like Citibank. It was the US Treasury that bailed out Citibank-- not the other way around.
That's why Harry Browne had the wisdom to specify Treasury-backed securities only for Cash in the Permanent Portfolio. Anything less might not be as permanent.
No one has been able to show me any evidence of a FDIC insured bank failure where depositors didnt have access to insured deposits within 48 hours. All of the examples are from non FDIC insured banks or from a time before FDIC.
The whole 'FDIC could fail and congress wouldn't help' argument is just too thin for me with our modern government that has backstopped money markets based on commercial paper (March 2020), stopped student loan payments and continue to extend it, suspended rent evictions. A real populist government. There is a 0% chance the congress wouldn't ensure the FDIC has the resources it needs to handle any and all bank failures up to the FDIC insurance limits. The fact that the Treasury stepped in to help Citibank and others in 2008/2009 just makes my point.
When and if the winds change I will reevaluate, but for now if someone wants to offer me $500 on $50,000 for a 3 month deposit plus normal interest, and the FDIC insures it, i'm all in.
I fully respect all of you PP purists that are following HB's guidance to the letter, but I will continue to keep up to the first $250K in cash in FDIC insured banks if it makes more financial sense to do so based on interest rates and deposit bonuses.