Negative interest rates in the US? Just ask the FDIC
Simon Black | Sovereign Man
Feb 23, 2016
Santiago, Chile
http://bit.ly/1ozHAGL

[snip]

Last week the FDIC released its annual financial statements, giving the public a glimpse into the financial condition of the organization responsible for backing up the entire US banking system.

The numbers are pretty incredible.

The FDIC maintains the Deposit Insurance Fund (DIF), which is the emergency stash for nearly all bank deposits in the Land of the Free.

DIF financial statements show an incredible 54% drop in cash equivalents since last year.

This means the DIF’s immediate liquidity is now just 1.2% of its total assets. In other words, nearly 99% of the insurance fund is tied up in various investments that may lose substantial value in the very financial crises that they’re meant to insure.

The FDIC has stuffed much of the DIF funds in an expanding bond portfolio. Yet by its own admission, this portfolio is down $10 billion, or roughly 14%.

Plus, a good chunk of that bond portfolio has been invested in securities that earn negative interest.

It’s incredible; the organization insuring the US banking system has actually purchased bonds that yield negative interest!

Now, including the losses, the fair market value of the DIF is about $62 billion.

That might sound like a lot of money. But total bank deposits in the US exceeds $13 trillion, according to the Federal Reserve.

This means that the DIF has net assets available to cover less than 0.5% of all bank deposits.