Tuesday, February 4, 2014

Millionaire Harvard economist pulls money out of bank from fear of Fed policy

There is an old axiom in the world of stock markets, which is, you cannot catch a falling knife.  This analogy refers to the fact that when a stock or entire market begins to sell off, it is usually the insiders and big fish who are able to get their money out by making the first moves, while everyone else attempts to sell with few buyers and in the end, lose their shirts.
It is the same way in banking, where institutions hold very little of the their total deposits in-house, and when a bank run starts, only the first few people are able to get their money out.  So when a Harvard economist with over a million dollars in a big bank publicly chooses to take it all out, then every other depositor needs to take this warning seriously as trust and confidence in the banking system continues to fade.


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