A while back I wrote a blog post which quoted Hemingway who once asked his friend Bob how he went bankrupt. Bob responded: "two ways, gradually and then suddenly" I believe we are in the "then suddenly" stage of this most recent financial melt down which explains why I'm seeing so many more business owners than usual; Banks are turning them away in droves.
It's not that the banks don't want to lend them money but rather that they simply cannot. Banks are losing deposits at an astonishing rate and, even though the large "systemically important" banks who many depositors consider "too big to fail" are the beneficiaries of deposits leaving the smaller banks, it won't last. It can't because the big banks have the same problem as the smaller ones. Namely, they own 30 year bonds paying 1% annually and interest rates are still at 5% so, whenever they have to give up deposits and sell Treasuries for liquidity they take staggering losses.
The problem isn't just at the banks, our nations money supply which is reflected by the data set called the "M2" turned negative in November - way before the SVB crisis. In fact, this is the first time since 1930 that has happened in America. My Father was born in 1930 and he is now 93 years old, do any of you know someone who was around then? You would need to find someone much older in fact that was actually aware of their surroundings then assuming they could remember that far back.
"The readout, released shortly after the market closed Friday, came around the same time as new Fed data showed that bank customers collectively pulled $98.4 billion from accounts for the week ended March 15.
That would have covered the period when the sudden failures of Silicon Valley Bank and Signature Bank rocked the industry."
"Just think about that.
Nearly 100 billion dollars in deposits evaporated in just one week."
The human mind is simply incapable of understanding massive numbers like a "Trillion dollars" even though we hear about it all the time on the news and read it in articles on the internet. It's part of our conversation but, the actual meaning of what 100 Billion dollars is escapes our ability to fathom what it really means. It doesn't matter to us anyway because I doubt anyone here has that kind of money. Anyone who does probably doesn't read my blog lol.
Hello Elon? If you're reading this call me please!
As if the Federal Reserve wanted to pour gasoline on the dumpster fire blazing right now in the banking sector, they have released their new program which makes it even EASIER to transfer many away from banks.
"The new FedNow service which is set to begin trial runs in July, could represent an uphill battle for banks to retain deposits. The Federal Reserve’s new FedNow program will allow bank customers at 10,000 financial institutions to instantaneously transfer funds in and out of bank accounts on a 24/7/365 basis. This is probably the biggest innovation since mobile banking and investment apps and will allow customers greater access to their money than ever before."
One would almost think that the Fed wants the banks to fail. That is certainly what I believe and I have said so many, many times. Why, you might ask?
It occurs to me that the best way to eliminate a debt so large it can never, ever be paid is to devalue the currency the debt is denominated in to zero. Problem solved! What might happen to the value of assets then? Well, it depends on what your using to value them doesn't it? Right now, most of us are conditioned to value our assets in dollars which is by design. How would you value your assets if the dollar was zero? Are the assets worth zero? Of course not, assets always have value but how that value is expressed is what's important. How much is your house worth? Your equipment? Your property? Most folks respond with a dollar amount. Have any of you ever considered what those assets are worth in Gold? Bitcoin? Food & water? Medicine? If you are a diabetic and Insulin is nowhere to be found, how many assets would you exchange for one dose? That is what they are worth at any given time.
There is no reason to trust any bank right now and that isn't such a bad thing. It's not the banks' fault either, many of them are very trustworthy and conservatively managed; it is that the very system they depend on is being undermined right under their feet. It's like fish in a bowl, everything in their lives depend on the quality of the water they live in.
Fortunately, because of the existence of alternate forms of "money" like Gold/Silver and Bitcoin who exist outside of the banking world and don't have the same counter-party risk we don't need to trust the banks, we do need to prepare ourselves and plan however. This puppy isn't going down easily.
"‘TRUST US, BRO’ AS THE ONLY TOOL LEFT
Banking only works when there is trust. It’s fundamentally based on the belief that the banking system is strong and resilient enough to protect your money. But this trust-based system has shown that the rich and powerful benefit from this protection. As we saw in 2008 and since, the regular taxpayer is paying the bill."
The same folks who are now systematically strip mining our economy want to stay in control whether we like it or not and they will do anything, and I do mean ANYTHING to ensure that they are ones controlling whatever the new "money" will be starting with the CBDC.
For now we'll keep limping along using a form of money (the US Dollar) which is depreciating rapidly - think of it this way: If you buy a house for $200k and a year later it's worth $400k you'll be happy, right? What if said it this way though: "You now need twice as many dollars to buy the exact same house (asset)!" Doesn't sound as good, does it?
I'm preparing by keeping assets outside the banking system which is exactly what the really, really rich people are doing too. I won't live in fear but I also won't subscribe to delusion either. No one knows exactly which straw "breaks the Camel's back" but it is closer now that at any time in my life, and I'm pretty old.
"If you fail to plan, then you must plan to fail"