Are you ready to handle deflation and depression? What do you do when there is a run on your bank?
John Mendolsa
Feb. 23, 2007

During deflation driven depression, banks will fail one after the other. The liquidity in the system will be there but no one will qualify for loan. The stock market will go down by more than 40%. The bonds will rally but everyone is scared to buy it at the hefty levels.

What do you do in that situation? Are you ready to handle deflation and depression? What do you do when there is a run on your bank?

The first and foremost thing to do is to get out of debt. During deflation debt is like a fire in the house. Next, diversify your portfolio. Do not stay too much invested in stocks or bonds – especially corporate bonds. Taxes will rise because Government will collect less and there will be a tendency to collect as much as possible from possible sources.

The worst thing that can happen is a run on the bank where your savings are. Do not depend too much on FDIC. The FDIC can go belly up after three or four major bank failures. Gold can be an alternative but on the very long term, deflation will take gold way below.

Are you ready to handle deflation and depression? What do you do when there is a run on your bank?
John Mendolsa
During deflation driven depression, banks will fail one after the other. The liquidity in the system will be there but no one will qualify for loan. The stock market will go down by more than 40%.
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