Could you imagine a world without banks?
No Chase or Bank of America to store your cash?
Mattress stuffers have been calling for this for a long time, but Biden could have just pulled the trigger to make this a reality.
But don’t worry… with every major shift comes large opportunities to profit.
Here’s how to profit from this one…
Let me first give you some backstory.
The Government is in the market for a new head for the Office of the Comptroller of Currency (OCC) – the Fed’s regulator of the largest banks in the country (Chase, Bank of America, Wells Fargo, etc.).
President Biden just nominated Saule Omarova as the White House’s pick, and she’s got her sights set on taking down the big banks… which gives us a huge opportunity.
Her plan proposes the following (and don’t worry, I’ll break down any of the technical nonsense):
- Moving ALL commercial bank deposits to a new kind of “FEDAccount”
This would mean your deposits at your local bank would now be deposits into a Federal Reserve-run bank account.
All U.S. Citizens would have these FEDAccounts automatically opened at birth.
This overhaul would mean the Fed would essentially borrow money from these accounts to pay for other things (essentially like the banks do behind the scenes).
- The New York Fed would start actively trading stocks
The Fed already buys assets to help prop up the economy, but the big change here is its aim to short-sell stocks that it thinks are in a bubble.
This becomes dangerous, because the Fed would be swinging large sums of money – including money you and I have deposited – into more speculative trades.
This could be a bigger risk to the economy than an actual bubble if they don’t trade wisely.
- The Fed would have complete control (and the ability to confiscate) all money in these FEDAccounts
This is the big one for me.
It reminds me of the Cyprus bailout that led to a national banking disaster.
The Cypriot Government confiscated money from the nation’s richest people overnight.
The banks are never the good guys, but I’d side with them over these FEDAccounts any day.
So, I mentioned there’s a way to profit from this…
This is all hinging on if Saule Omarova gets picked.
The moment I see she’s elected, I will be pushing money into bonds, because the Fed will be looking to make bonds strong for foreign investment.
With FEDAccounts it will be able to skip its old tricks, like raising rates, and simply buy bonds with the money in those accounts, pushing the prices higher.
You can essentially buy bonds just like you buy stocks by investing in the iShares 20+ Year Treasury Bond ETF (TLT).
There’s always a positive to every negative, and it’s up to you to capitalize on it.
