Safety Deposit Box Is Not Safe At All

I have been thinking about getting a safety deposit box to store some jewelry. To my surprise, safety deposit box is not so safe at all. So many reports of thefts.

I googled “safety deposit box theft” and came up with several horror stories. There were 3 different reports on thefts of WellsFargo’s safety deposit box (reports in the comment section, right after Mar 14 at Los Angeles, Oct 10 at Marina Del Rey, Jul 18 at Santa Clarita, and last one at Rancho Mirage, all four in California), and 1 report of a theft on more than 100 safety deposit boxes at Wachovia.

I have also personally asked a WellsFargo representative about some details on their safety deposit boxes. I was told that “WellsFargo is NOT liable for the losses in the event of theft or fire“. By the way, FDIC insurance on the $100,000 does NOT cover anything stored in safety deposit box. NOTHING is covered in there basically. Getting any home insurance to cover your safety deposit boxes will be very tricky too, since they are not at your home.

What’s worse is that it will be extremely hard for you to prove what’s in the safety deposit box. As for evidences, banks may or may not have any surveillence video tapes backup for investigation, and these crimes probably happen long before you discover that your precious items are gone. You can claim all you want, but since banks supposedly never check what’s inside, they would not have any knowledge of what’s in there.

From the comments at the soundmoneytips.com:

When you go to get in your saftey depos. box the teller asks for your key then she puts in both keys, turns both keys and pulls out your box. Upon returnig and locking your box all she has to do is position her body between you and the box insert both keys and only turn her key. She then hands your key back and you leave. She can now go in at any time and open your box because your key was never turned to lock the second lock. My friend understood this and said to the lady I am keeping my key I will insert and turn it to be sure my (the second) lock is locked.

…that simple slight of hand leaves your box hers or his for the taking. She can then have a friend come in pretend to sign in and pretend to hand her a key and then empty out your SD box. Then the teller can claim the person showed ID and had the key so how was she to know it was not the right person.

Another thing that you may want to know about homeland security confiscating safety deposit boxes. It is rumored that in the event of emergency, you cannot access your safety deposit box for any items such as gold, silver, guns, and cash. Just google “homeland security safety deposit box”, and you can find more than 20 articles reporting the same story over and over at so many different sites. But the fact is it is nothing new. The terrorist-related acts passed since 911 have put executive branch of the government in the supreme power. Since FDR (Roosevelt) has done it before, it won’t be surprising to do the same in the name of “national security and interest”.

Global Economy In A Nutshell

From about 1980 to 2000, global economy (especially US) enjoyed unprecendented steady growth without the inflationary pain that often comes with it. There were three primary trends:
1. Technology advancement has lowered real costs associated with production of goods and services.
2. International trades and globalization faciliated capitalism to find the lowest cost structure through a combination of variables in global wage arbitrage, tax, and transportation costs.
3. Just-in-time inventory systems through information technologies have reduced the inventory needs to the lowest level required.
4. Inflationary effects from monetary and fiscal policy are negligible when it is averaged on a global economy that has increasing number of low wage work forces without much end-user demands for basic commodities in third world countries.

Everything was all good, but all good things have an end. Going forward, I believe the following factors and trends will increasingly shape the global economic landscapes:
1. Technology advancement is hard-pressed to lower most of the real costs for goods and services in a significant way (let’s say 10+% improvement on an inflation-adjusted, annualized basis, and weighted by its monetary contribution). In another words, the fruits left are the low-hanging fruits.
2. International trades and globalization only work in a low transportation cost environment. High energy prices may reverse the gear on globalization into de-globalization. High inflation will also cause higher trade barriers for crucial commodities.
3. Just-in-time inventory is causing and and will continue to cause extremely high price volatility for prices of commodities and goods. From a mathematical point of view, a feedback system with less buferring capabilities is usually less stable than the one with more buffers. The buffers act as a low-pass smoothing system to smooth out the magnitude of changes from the input to the output. Using laymen’s terms, a low inventory system speeds up the the price changes from the input to the output. Furthermore, it excerbates the volatility in capitalism which hinges on the real-time dynamic balances between supplies and demands.
4. Rising living standards in third world countries put the capitalism to test. Yes, the textbook is correct in stating that increase in money circulation will result in higher inflation. The statement applies in a closed economic system. US domestic inflation is continued to be held down via global trades for now temporarily. However, increase in US money supplies have been “sterilized” by foreign governments via printing of their own currency and buying up of US debts. The end result is that the labor workforce of Asian and Middle-Eastern countries are not enjoying the fruits of their hard work through an appreciated currency to bring a higher living standard. Rather, the labor are suffering the majority of the inflationary effects from the US, while the businessman pockets loads of money primarily not through a more efficient company, but through a wage arbitrage mechanism due to the currency exchange rates held down by foreign governments.
5. An aging demographics is going to exert its inflationary effects on mature economies. Less active labor and more demands for services from elders is the formula to drive wage inflation, if all other factors hold the same.

Whether my observation and interpretation on global economy is correct or not, it is always important to understand the past on how we came to where we are, in order to project the future and find where we may be going. What was achieved from 1980 to 2000 may not be achievable anymore. It’s easy to say that human innovation always triumphs. But unbounded optimism is best to check against with realities once in awhile.