Negative Interest Rates in the US? Just Ask the FDIC
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…
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