In a new interview on Bloomberg Markets, Hendry says mass panic and capital flight away from the US banking sector is entirely justified.

Hendry says a further decline in the M2 money supply, which in part tracks money in liquid checking accounts, could convince the US government to step in and prevent citizens from taking their capital out of the banking system.

"Sometimes it's kind of relevant to panic. I would recommend you panic… You've seen the biggest waterfall decline in M2 right now. M2 is deposits, not loans. That's the deposits fleeing the system and going into money market funds.

That could reach a crescendo where the Treasury and the Fed may have to come in and actually restrict your right as a US citizen to pull money out of the US banking sector."

Hendry says capital flight from US banks is not solely about fears on whether the FDIC will insure deposits above $250,000, and a blanket guarantee on deposits would not solve the problem.

“There is capital flight, deposit flight from the banking sector seeking yield. I fear that, I don’t say this lightly, but in 1934 the Federal Reserve Act confiscated gold from US citizens.

We’re at the point where the Fed and Treasury officials I’m sure are having to consider a gate a lock on US bank deposits.”