Of all the peculiarities about human nature, one of the most interesting in my opinion is that we’re so resistant to change.

Humans simply don’t deal with it well. We tend to root. We find comfort in familiarity.

And, even when the familiar becomes unpleasant, we still put up with it. We prefer to suffer through something that we know rather than change things and risk the unknown.

This is why people stay in bad relationships. Or why they continue working for bosses they dislike at jobs they despise. It’s the fear of change.

But everyone… absolutely everyone… has a breaking point. It’s a point where the status quo becomes so uncomfortable, so painful, that we snap. And walk away.

It’s the same in finance. People stick with what they know, even if they have to endure a little pain and suffering.

Today’s current banking environment is the perfect example. In the US, interest rates for most bank accounts are so low that they fail to keep up with inflation.

You are doing very well if you can generate a whopping 0.5% interest. In Canada rates can be a bit higher.

But when you compare these rates to even the official rates of inflation, it’s clear that savers are guaranteed to lose money.

In Europe it’s even worse. Interest rates at many banks are negative… so savers are actually paying the banks.

In theory there’s nothing wrong with paying your banker, presuming that they’re providing a real service.

Traditionally, banks were no different than a secure storage facility: depositors would pay a fee in exchange for the bank safeguarding their savings.

These days a lot of people might pay 50 bucks a month at a U-Store-It place to store $10,000 worth of junk. So why not pay a small fee for a banker to store $10,000 worth of cash?

The reason is that banks don’t operate like a storage facility.

It’s not like the proprietor of the U-Store-It is loaning out your sofa to make a few bucks on the side. If he were, it would be called fraud, and he’d go to jail for it.

Banks, on the other hand, are actually ENCOURAGED to take your hard earned savings and make a few extra bucks on the side.

In fact they have a history of making often absurd loans and wild, overleveraged bets using your money. Not theirs.

So just consider how insulting this is to actually to pay them interest; paying for the privilege of them gambling with your savings. It’s obscene.

But like I said, we all have a breaking point. And there will reach a level where rates get so low (or negative) that no rational person would continue holding money at a bank.

Why bother? You could just withdraw most of your balance, then pay a small fee for a safety deposit box that you stuff full of cash. Cheaper. Easier. Better.

Cash in your hand might pay 0% interest… but at least it doesn’t cost you.

But there’s a huge problem with this approach: there’s very little physical cash in the system.

According to the Federal Reserve, the amount of physical US currency in circulation is about $1.3 trillion. Yet the amount of “M2” money supply is nearly ten times that amount.

So just imagine if even 10% of people hit their breaking points and withdrew their money in cash– there wouldn’t be enough cash in the system to support this demand. And the banks would subsequently collapse.

If governments have proven anything to us over the last seven years, it is that they will do anything to keep the banks from going down.

This is a major reason why they’re trying to get rid of cash, and in some cases even criminalize it under the ridiculous auspices of the war on terror.

In the US, some of the more prevalent names in finance have started calling for an outright ban of cash, including a prominent economist from Citigroup.

(This is a rather convenient position for Citigroup.)

Greece is another great example– they’ve already implemented a tax on cash withdrawals and wire transfers. And further restrictions will inevitably follow.

These measures are all different forms of capital controls, designed to prevent you from taking your money away from such a destructive system.

In fact, I expect the next round of capital controls will be designed to protect the banks… from you.

When a government is bankrupt, the central bank is nearly insolvent, the banking system is illiquid, and an entire population suffers from interest rates that are either negative or below the rate of inflation, capital controls are a foregone conclusion.

They’ll hit just as soon as enough people reach their breaking points… when they say ‘enough is enough’ and they take their money out of the banking system.

Governments have done it before: they’ll declare a ‘bank holiday’ and then impose some sort of freeze on withdrawals. Just like we saw in Cyprus in 2013. Or the US in 1933.

The data and history are very clear on what will likely happen. We just can’t pinpoint the date.

Very few people will guess correctly and withdraw their cash the day before capital controls are imposed.

That’s why it makes sense to take certain steps now.

Consider holding some physical cash, including some healthier currencies like the Swiss franc or Singapore dollar, as well as precious metals.

More importantly, consider moving a portion of your savings to a rainy day fund at a well-capitalized bank overseas in a jurisdiction that isn’t bankrupt.

After all, it’s hard to imagine that you’ll be worse off for having some savings at a strong, healthy bank that actually pays a reasonable rate of return.