The decision by the Trudeau government in Canada to freeze the bank accounts of the truck convoy protesters and their supporters now appears to have backfired monumentally, so much so that it has threatened to possibly crash the Canadian banking system as people apparently began rushing to withdraw their money out of fear it will be taken from them.
What might seem like a great tool for political punishment has long term consequences, especially if people start withdrawing their money and/or shifting the placement of their investments to more secure locations away from the reach of the Canadian government. Considering the rules of fractional banking and deposits, it doesn’t take many withdrawals before the banks have serious issues.
Is this happening? It appears it might be, though the Trudeau government and banks appear to be trying to hide it. The first indicator was the sudden several hour shut down of all web access to Canada’s five major banks shortly after the bank freeze was announced. The available data, though limited, suggested that the banks had suddenly experienced a run of customers withdrawing money, and shut down access temporarily to try to stem the tide.
The next indicator is the decision yesterday to unfreeze almost all of those bank accounts. That decision, along with Trudeau’s announcement today that he is revoking his emergency powers, suggest that the banks had put pressure on him to act, because the withdrawals had not ceased, and if he didn’t act the entire system would have crashed.
Whether Trudeau’s actions will end the panic however is quite unclear. I know that if I had any cash in a Canadian bank I would right now be looking to put at least some of it elsewhere. The same thought applies to American banks, as their recent effort to shut down accounts of conservatives like Mike Lindell suggests that many banks will go along with a similar order by the Biden administration. And with an American truck convoy just now gearing up and heading for Washington, no one should be surprised if such a draconian action is just over the horizon.
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