2023 Banking Crisis (General)

by dan, Friday, March 17, 2023, 15:24 (493 days ago)

What the SVB collapse says to me about the state of the world economy and its currencies.

SVB needed money, so it sold government bonds which had lost value due to higher interest rates. As such, this sale resulted in a loss to the bank of billions of dollars, and it sill needed money.

So it tried to find a buyer for the bank, but there were no takers.

When word got out that this was going on, there was a run on the bank, and it got shut down. All within 48 hours or so.

Then another bank got shut down.

But the reaction by the Biden admin is where it gets interesting. They swear that the lifeline they are throwing depositors is not a bailout. Oh no, couldn't have that. They're initially using FDIC insurance money, which is insurance paid for by banks when they join the FDIC.

But that fund doesn't have enough, clearly. So the Biden admin has created a new program, a new program that LENDS MONEY TO BANKS.

And where will this money come from? They'll print it! Digitally, that is, but they'll create it out of thin air. Doesn't this sound familiar?

First of all, whether or not taxpayers are footing the bill initially is a moot point. We'll all pay for this in one way or another, and it's just pumping more money into the economy which will increase inflation pressure. In other words, there are vast segments of the economy that are 'empty', that have little or no intrinsic value. This bank is an example, but rather than letting it die a natural death, the govt. is pumping money into it, the argument being that if it were to die, it would start a chain reaction and multiple other banks would fail.

Why? If a bank is healthy, why should it fail?

It wouldn't. If a bank is healthy, a run on the bank would not kill it. So what this all demonstrates to me is that the govt. knows that most if not all these banks are essentially worthless. They took money for savings (to vastly oversimplify) that they no longer have.

It's a mess and it's been a mess at least since the late 70's, and the US keeps patching things up by raising the debt limit and printing money. It can't go on.

So now the govt. is raising interest rates to try to decrease inflation, inflation caused by money creation, while at the same time they are printing money to give banks who are suffering from the raising of rates! It's a total shit show.

But what it really demonstrates is how this is all just a house of cards, or smoke and mirrors. Our currency is hollow. The US is over 31 TRILLION dollars in debt. How is that possible? So pretty much any action they take (or don't) will send ripples through this house and cards will begin falling. SVB was one card, a canary, and the US responded like it always does, by bailing it out by printing more money, the very thing that got us in the trouble in the first place!

Meanwhile, numerous other banks are teetering. Switzerland bailed out Credit Suisse, but what's more interesting is what happened with First Republic. First Republic secures $30 billion rescue from large banks. Major banks decided to bail it out. What does that tell you? It tells me that The big boys are feeling the heat and will hand over 30 Billion dollars to keep a bank afloat.

This isn't going away. You can't have the leading economy in the world be 30 TRILLION in debt and just turn it around on a dime. It's a no win situation. There's no way out of this without serious pain of some sort. For now, the US keeps pushing that pain away with fake money, like a heroin addict. Good for another day.

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