Last Updated on July 6, 2017 by Marie Bautista
Sometimes, life deals you a trick card.
The shower gets busted (and for you, warm showers are a “need”, not a “want”)…
the blow dryer suddenly fries (and you are that kind of person who cannot go out without your hair in place)…
the bedroom TV stopped working after 15 years (and you just have to know how that fifth guy in the reality show confessed he was gay)…
some dark greasy thing is leaking from the CRV in addition to the car remote going dead for like a millionth time…
and transfer taxes on your parents’ estate are bigger than you expected…
(Okaaay, I just let you take a peek on my drama…so shallow now that I am reading it hehe)
What is the PDIC?
First was when I was in grade school.
My friends and I who opened a Savings Bank Account at Banco Filipino just so we can have a Hello Kitty Passbook plus several Sanrio products bundled with it had to line up in front of the bank, along with a mass of other people (probably the entire Baguio City) to get back the money we saved (we skipped recess just so we can save some money to save so that we can have a Hello Kitty passbook!).
I couldn’t remember if we got our money back, though.
(I erased bad memories, except that I still love Hello Kitty).
The second was with LBC, but I did not actually line up.
I had insider friends (who didn’t know about the bank problems, ironically) who gave me a form to fill up, a claim slip, and I got my money back within two months.
What is a Bank Run?
PDIC insures your deposit.
Where does the PDIC get its Insurance Fund?
But why Do Banks Go Bankrupt?
Let me tell you about fractional reserve banking.
lending a part of your money).
When this happens, the bank cannot give back all of the bank clients’ deposit in full since the amount they retained and available is probably only around 18%.
Those who first got in line would probably get all their money back, but the rest won’t since the bank has very limited available cash.
And by the way, do you still believe that our money is backed up by gold?
“In 1971, when President Richard Nixon took the dollar off the gold standard, the dollar became fiat money. This is the type on money that fuels the world economy today. Fiat money is money a government declares to be money. The definition of the word fiat is ‘it shall be done’ In simple terms, the government runs a printing press and turns a piece of paper into money.”
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