Banking Crisis — The Story is Far From Over

In March 2008, Bear Stearns went out of business. Before their collapse, both the Treasury Department and the Fed insisted that the housing sector and the economy were just fine. After Bear Stearns went under, the Fed used its magic behind the curtain to push buttons and click keys. In June of that year, Treasury Chairperson Bernanke told the American people that the risk that the economy has entered a substantial downturn appears to have diminished. By September Lehman Brothers was bankrupt and the housing market was flooded with foreclosures.

In 2008 the US taxpayer was on the hook for the greedy mistakes of Wall Street Bankers and corrupt US politicians. A more gigantic debt bubble has been artificially created by the Fed over the last 15 years. Interest rates were suppressed, money was printed, speculation was encouraged, bailouts were common, and debt was piled on. That has changed significantly with rising interest rates and the significant devaluation of our paper money. The government is devaluing our money in a sad attempt to inflate our enormous debt away.

Jamie Dimon, CEO of JPMorgan Chase, says the banking crisis is not over and will cause repercussions for years to come. Janet Yellen who is our current Treasury Chairperson recently commented on the strength of our banking system. Yellen states that the banking crisis that flared up recently after the Silicon Valley Bank debacle is stabilizing and that the government could take more action to support depositors to dampen contagion effects. In other words, there is nothing to worry about as always the government can just print more money. Well, it’s eerily quiet after the most recent banking crisis in March. We are very concerned about the health of our financial system and the value of our dollar.

The liquidity situation was a banking crisis in the fall of 2019

The first banking crisis since 2008 started in 2019. We have stated many times that there was a liquidity problem in the repo market. The Fed funneled loans totaling almost $20 trillion to a few big banks. Deutsche Bank, Citigroup, Barclays, Goldman Sachs, JPMorgan, and Nomura were the largest borrowers of repo loans. This topic gained little attention in the media. I guess the media can spread disinformation and also can be gagged depending on the situation. It is awfully quiet now considering these liquidity conditions still loom in the banking sector. What is the answer? We can print more money.

The banking crisis in March 2020 was blamed on the pandemic

In early 2020 a very convenient pandemic occurred. The subsequent banking crisis in the share price of certain banks was blamed on the pandemic. Many of the banks saw their share price drop more than 40% during the first quarter of 2022. The Fed continued its lending programs to Citigroup, Wells Fargo, Bank of America, and JP Morgan Chase. The Fed filed these 2020 reports to Congress under Section 13(3) of the Federal Reserve Act in response to COVID-19.

March 2023 saw the third banking crisis in the last few years

Three years later, in March of 2023, the second and third largest bank failures in US history occurred: Silicon Valley Bank and Signature Bank. Silvergate also experienced a bank run. Credit Suisse Bank needed to be bailed out by UBS. First Republic Bank has been rescued this week by JPMorgan Chase. Now here is the best part. The Federal Reserve Board announced it will make available additional funding to eligible depository institutions to help assure banks can meet the needs of all their depositors. You got it, we can print more money. The new program is called the Bank Term Funding Program or BTFP. The Fed, the FDIC, Janet Yellen, and many other political and banking hacks are involved.

According to the Bank Term Funding Program, depository institutions may obtain liquidity against a wide range of collateral through the discount window, which remains open and available. After the trillions of dollars that have been spent and printed, and the trillions more to come, we are all going to need a place in line at that discount window. The whole banking system is a total mockery and the response until it blows up is to print more money and kick the can down the road. As Hemingway said, you go bankrupt first gradually and then suddenly.

You can’t fix a debt problem by issuing more debt. You can’t fix a banking system problem by printing more money and making depositors whole. The result is still the same. The system will fail under the weight of all of this debt. The assets behind the debt will crater in value. Inflation is not under control, the risk is enormous, the debt is toxic, and knuckleheads are making important decisions. To beat inflation requires significant financial pain. If the global elite doesn’t support that plan, then we print trillions to just keep the markets from imploding. Either way, it’s very bad for the value of your US dollar. The safety of your money is under attack in the banking system. Do you have enough gold?

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