Nervous Americans want easy access to their cash

September 16, 2010 by · Leave a Comment
Filed under: Currency News 

This is a sign that investors and holders of capital are not as confident in our banks holding their cash when deposits are paying historically low interests.  FDIC said that certificates of deposits (CD) declined by $200 billion while checking and savings accounts rose by almost the same amount.  Wonder if the $30 billion difference went into hard assets while we are seeing all time highs in the hard metals.    With this money going into very short term accounts, we are seeing credit tighten even more.

Partially some people might be questioning the banks ability to repay in 6-12 months time so they want to be as liquid as possible.  We are in fall again and the stock market rally has lost steam and we are overdue for a large correction.  After the last decline, maybe people are wising up and waiting for the stock market drop so they can buy at the bottom again.  The trick is to know when we have really hit bottom?   Something to ponder.

AP – People are bailing out of bank certificates of deposit and parking their cash in checking and savings accounts that earn little or no interest but also don’t exact penalties for early withdrawal.

It’s another signal of how nervous Americans are about their finances as the U.S. economy struggles. Consumers are stuck with few options to make their money work. The Standard & Poor’s 500 is down 0.5 percent for the year, one big reason why people have pulled a net $145.3 billion out of mutual funds in the first eight months of the year, according to Lipper Inc.

“At times of uncertainty, there is a natural human tendency to stay liquid and have money easily accessible,” says Dan Geller, executive vice president at financial data analysis firm Market Rates Insight.

The firm’s analysis of domestic banks insured by the Federal Deposit Insurance Corporation, found CD deposits declined by $200 billion in the first six months of the year. Deposits in checking, savings and money market accounts rose by $171 billion.


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