I was obviously insufficiently clear about what to do with existing savings accounts. Of course one cannot immediately demand that existing investments be liquidated. Richard is absolutely right – that would be nonsense. However, they are what is left for savings depositors after re-arranging current accounts. Therefore, they should all go into a new investment company owned by the savings depositors in proportion to their contributions. Savings depositors would then become shareholders in that new investment company.
That would provide $8,177,559,000 less shareholders investments and other liabilities to cover $4,754,721,000 in savings deposits. Shareholders should be entitled to the value of their bank properties and equipment and the new investment company should be entitled to the remaining “assets” – some of which will be lost in failed investments. Nevertheless, there should be enough to protect their original deposits plus a capital gain.
However, neither can be guaranteed. Yet, the facts remain that savers asked the banks to invest these funds for them and, through this mechanism, they will receive the results of those investments.
In my talk, I referred to new savings, not existing savings.