GSI Banner
  • Free Access
  • Contributors
  • Membership Levels
  • Video
  • Origins
  • Sponsors
  • My Account
  • Sign In
  • Join Now

  • Free Access
  • Contributors
  • Membership Levels
  • Video
  • Origins
  • Sponsors
  • Contact

© 2025 Grey Swan Investment Fraternity

  • Cookie Policy
  • Privacy Policy
  • Terms & Conditions
  • Do Not Sell or Share My Personal Information
  • Whitelist Us
Daily Missive

The Great Bank Heist

Loading ...Lau Vegys

October 24, 2024 • 4 minute, 33 second read


The Great Bank Heist

The Great Bank Heist

Lau Vegys, Doug Casey’s Crisis Investing

Remember when your parents told you there’s no such thing as free money? Well, they clearly never ran a bank during the Federal Reserve’s high-interest rate era.

New data shows that for the past two and a half years, U.S. banks have been gorging themselves on a feast of free cash, courtesy of your friendly neighborhood Fed.

How much cash, you ask? Oh, just a cool trillion dollars. That’s right, with a “T”.

Pocketing the Difference

As you may recall, in 2022, the Fed made a sharp turn, slamming on the brakes with aggressive rate hikes to fight inflation (which, of course, they’d caused in the first place with their money-printing spree).

Between March 2022 and July 2023, Chair Powell and his merry band of money manipulators cranked the federal funds rate from a rock-bottom 0%-0.25% all the way up to 5.25%-5.50%.

As the Fed jacked up rates, banks started raking in higher yields on their deposits at the Fed.

In tandem, however, they decided to keep the interest payments for depositors—like us—shockingly low, pocketing the difference.

Recent data from the Federal Deposit Insurance Corporation (FDIC) shows that by the end of the second quarter of 2024, the average U.S. bank was paying depositors a mere 2.2% in annual interest.

Now, 2.2% might sound pretty good if you’ve gotten used to the near-zero rates we’ve had for the last decade. But remember: during that same time, these banks were collecting a fat 5.5% from the Fed.

Do the simple math, and you’ll see that banks were pocketing a nice 3.3% for themselves. Roughly speaking, of course, since those rates fluctuated, but you get the idea.

But hold on, it gets worse.

If you happened to have your money with the big guys like JPMorgan Chase (JPM) or Bank of America (BAC), you were really getting the short end of the stick. These banking giants were only paying out a paltry 1.5% and 1.7%, respectively, to their depositors.

Now, here’s where the heist part comes in…

It turns out those low payments to depositors generated an eye-popping $1.1 trillion in revenue for the banks. And when I say “eye-popping”, I mean it’s completely unprecedented in excess interest revenue. In fact, it’s roughly half of the total money banks made during that same two-and-a-half-year period.

The Rigged Game

Now, you might be thinking, “So what? Banks are private financial institutions and have the right to set deposit and borrowing rates. It’s free market capitalism, right?”

Wrong.

The whole fractional reserve banking system, with the Fed at its forefront, couldn’t be further from free market capitalism. And, as this story shows, the banks are essential beneficiaries and accomplices of this rigged game.

It’s actually a perfect storm of financial manipulation.

Think about it. You have the Fed paying banks interest on the money they keep parked at the central bank through something called “interest on reserve balances” (IORB).

Traditionally, banks are supposed to make money by lending out deposits to businesses and individuals. You know, actually contributing to economic growth. But why deal with all that hassle when you can simply rake in a risk-free 5.5% from the Fed?

That’s how the Fed encourages banks to hoard money instead of lending it out to grow the economy. This means less money available for businesses to expand, for entrepreneurs to start new ventures, or for you to get a reasonably priced loan. 

All in the “noble” effort to fight their own self-inflicted inflation, of course.

Okay, so it’s definitely a big problem, but it wouldn’t be so bad if you could at least get some of that money back in the form of interest on our deposits, right?

Unfortunately, as this story shows, you just don’t.

While some banks raised rates on certain savings accounts in line with the Fed’s hikes, reports show that more than 4,000 U.S. banks just kept the extra cash for themselves to boost their profit margins.

The result? The staggering $1.1 trillion in excess profits for banks I mentioned earlier.

That’s money that could have been in your pocket or fueling economic growth. Instead, it’s lining the vaults of banks—with the Fed’s stamp of approval.

What Can You Do?

While banks were raking in billions, what were you getting on your savings account? Probably an amount that wouldn’t even cover a bag of groceries by the end of the year.

So, what’s an everyday investor to do in the face of such blatant cronyism? Here are a few thoughts:

  1. Don’t be a sitting duck: If your money is languishing in a low-interest savings account, it’s time to shop around. Online banks and credit unions often offer much better rates than the big banks.
  2. Consider alternative investments: With banks playing these games, it might be time to look at other options for your money. Gold, silver, and other hard, unprintable assets can be a good hedge against both inflation and financial shenanigans.
  3. Stay informed: The mainstream media might not be telling you the whole story, but that doesn’t mean you have to remain in the dark. Knowledge is power. And in a world where the deck seems increasingly stacked against the average person, being informed is your best defense.

The game might be rigged, but that doesn’t mean we have to play by their rules.

 ~~ Lau Vegys, Doug Casey’s Crisis Investing


The Ghost of Bastiat

October 6, 2025 • Addison Wiggin

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

The Ghost of Bastiat
The Dollar’s Long Goodbye

October 6, 2025 • Addison Wiggin

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Dollar’s Long Goodbye
A Vote For The Yen Carry Trade

October 6, 2025 • Addison Wiggin

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

A Vote For The Yen Carry Trade
Beware: The Permanent Underclass

October 3, 2025 • Addison Wiggin

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

Beware: The Permanent Underclass