Macro Expert Hugh Hendry Says There Is a “Rising Like Mercury” Chance that US Banks Will Limit Cash Withdrawals

Despite continuing volatility in the financial industry, macro expert Hugh Hendry is broadening his views on the US banking system.

Hedge fund manager and recent Stansberry Research interview Daniela Cambone claim that the Fed’s restrictive monetary policy has raised the prospect of future limits on cash withdrawals from banks.

In the midst of the debt crisis in the mid-2010s, Greece and Cyprus imposed limitations on all bank withdrawals, something unheard of in the United States.

In Nigeria, people are now restricted to withdrawing a maximum of 20,000 naira every week (about $43 USD). The action, according to the leaders of the economically-challenged country, is intended to drain cash reserves in preparation for an eventual transition to a totally digital economy.

Hendry predicts that, in a world where customers may withdraw their money at the click of a button, the banking sector in the United States will continue to see deposit flight.

He also notes that depositors now have the incentive to move their money out of banks and into money market funds due to the Federal Reserve’s rate rises over the last year.

The combination of being unable to change rates and the newfound freedom to spend rapidly is an added bonus. The Fed’s excessive offering in the money markets is the cause of the outflow. The Federal Reserve is there if you need them.

So, what is the Federal Reserve up to, exactly? It’s a major factor in the continued flight of capital from financial institutions.

As of this writing, the average yearly return on a savings account is 0.25%. The benchmark rate used by the Federal Reserve is between 5% and 5.25%; money market funds pay up to 4.75% APY.

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