What is your feeling of the financial situation going on right now? Do you see it? Can you see the lies being fed to us? So we have had 3 major bank fails in the last two and a half weeks. Biden says not to worry. Treasury Secretary Janet Yellen says everything is fine even though there was an unscheduled meeting with all of the major financial players on March 24th.
Silicon Valley Bank crashed on March 10th. The FDIC stepped in and took over the bank. That same day Yellen basically offered the bank customers thoughts and prayers with no bail out, a couple of days later all FDIC insured deposits were going to be covered as with all other deposits of more than $250,000. So the government covered a couple of billion in deposits. This was the headline from CNN. This week, the go-to bank for US tech startups came rapidly unglued, leaving its high-powered customers and investors in limbo. Kind of tells you all you need to know. We also learned that this bank was a heavy investor in BLM and woke ideology.
Credit Suisse, based out of Switzerland, also came into some financial trouble on March 16th. The Swiss government gave them a life line of $53.7 billion only to be bought out a couple of days later by UBS for $3.25 billion. Credit Suisse had assets numbering about 1.40 trillion. You want to talk about a deal. The Swiss government passed an emergency ordinance to broker the deal which bypassed the shareholders.
Here is my take. First off I am no economist. I read listen and watch and what I see does not add up. Let’s go back to the banking crisis of 2008, when it was finished the government restricted what the banks could invest in. Government bonds and securities. What is going on with most banks is they invested in 10 year bonds at 3.99% interest and as the Federal Reserve keeps raising rates those bonds are only delivering let’s say 1.99% interest. Well there you go, the government is costing the banks money. The FDIC has about $128 billion in it’s reserves, the agency can borrow $100 billion from the U.S. Treasury at its discretion, and as much as $500 billion with approval from the Treasury and the Federal Reserve. The SVB failure and bailout was $209 billion. Total U.S. deposits are $18 trillion and insured deposits represent $ 9 trillion. Nothing could go wrong there.
We are in the middle of an inflation crisis. The Fed keeps raising rates to curb inflation to take money out of the system. Two banks fail and the precedent is set to bail out all deposits. There isn’t enough money in the system to cover all deposits, which means the government is going to have to print money we don’t have. The Fed will have to raise rates to “keep” inflation low. Be prepared to have the blame game start. The Democrats will want more oversite and calls for a federal digital currency to keep control of everything. We are witnessing the government take down the financial system and offer the fix to it. If it happens welcome to China folks, they will control you lock, stock and barrel