US on the brink of a major depression, warns Kiyosaki

US on the brink of a major depression, warns Kiyosaki

Robert Kiyosaki, the author of ‘Rich Dad Poor Dad,’ warns about the dangers of holding money in regional banks, which could follow their larger counterparts in collapsing without the prospect of government bailouts, potentially leading to a great depression.

Amid repeated warnings of the possible financial crisis, particularly following the collapses of numerous banking giants, Robert Kiyosaki, the author of the best-selling personal finance book ‘Rich Dad Poor Dad,’ has alerted his viewers of the perils of holding their money in regional banks.

As it happens, Kiyosaki was discussing the importance of investors understanding where they hold their money and the  capacity dangers involved, with his guest Andy Schectman, the CEO of Miles Franklin Precious Metals Investments, in the latest ‘The Rich Dad Channel’ emergency podcast premiered on May 24.

Reports by the financial educator, small, regional banks could follow their larger counterparts in collapses but without the prospect of bailouts by the Government, unlike the national banks that are under the government’s protection owing to their systemic danger to the worldwide economy.

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As Kiyosaki stated, this could have wide-reaching consequences because:

“If a regional bank in your area goes down, your town goes down with it ‘cause there is no more credit going into the market. And when that happens, it goes to depression. And that’s where we’re sitting. We’re sitting on the edge of not a fall, but a possible great depression.”

National versus regional banks

Reports by Schectman, national banks are bailed out “because they’re so systemically tied to each other” and “ as well big to fail,” their “balance sheets so intertwined with one another systemically that if they fail, it would have ramifications for the entire worldwide financial system.”

“These large, too-big-to-fail commercial banks are (…) guaranteed by the Federal Reserve, while the rest of the banks, as we were informed by Janet Yellen, if they’re not as well systemically large (as the bulk of them are not), they will not bailed out. They’ll be bailed in where the depositors are general creditors of the bank, and the money that you deposit really belongs to the bank and not to you.”

In particular, he was referring to the  United States Senate testimony by the Treasury Secretary on the 2024 budget and her reply to Oklahoma Senator James Lankford regarding the app  of uninsured deposit thresholds in making the depositors whole.

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Nonetheless, Yellen admitted that not all depositors would receive protection over the Federal Deposit Insurance Corporation (FDIC) limitations of $250,000 per account and that Government refunds of uninsured deposits would not extend to every bank that fails but only to those that present a systemic danger to the financial system.

What can one do?

Requested by Kiyosaki what a individual can do to guard themselves against losing their money in case their regional bank crashes, Schectman has suggested investing in gold and silver, likewise as removing oneself from the banking system altogether:

“If you have the  potential to own some precious metals, do so because (…) it is an investment that is not simultaneously someone else’s liability. (…) So removal of counterparty danger, removal of variable price debt, removal from the system best you can is where you start.”

In mid-March, Kiyosaki had commented on the collapses of major banks, stating that they “went WOKE and went BROKE” and advising his followers to invest in gold, silver, and Bitcoin (BTC) as a way to guard themselves against the crisis that was “just starting,” likewise as the  dangers of losing their pensions, individual retirement accounts, and 401(k) plans.

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