I know about as much about banks as I know about quantum physics and statistical analysis program design, which is, it appears, exactly as they have intended. They have WAY too much power and hate the small depositors like me. This is NOT a healthy situation. When their $86 squintillion turns out to be another chimeracle fantasy it will be quite educational to see what is left after the entire world implodes. Meeeooowwww!
Dumbasses and crooks in charge, everywhere you look. And if you stand up and say “Enough”, you’re the crazy one. These highly credentialed buffoons put themselves and us into this mess. This is the culmination of a series of hubris driven experiments that each demonstrated that it was a bad result, and then these asshats did it again until the cake was baked. And the cake is baked. There’s no way to fix this without pain. But the buffoons get re-elected and reappointed and the banks give them donations and they scratch the bankers’ backs. And now the biggest financial mess in the history of the planet. They will temporize. They will try to keep the system from collapsing. They won’t keep jacking interest rates. Total banking system collapse means precipitous societal collapse. Slower collapse via inflation is what they will choose. Less messy. Less obvious. More cover while they sneak out of town and let the next guy deal with this mess.
Easy. If no one owns anything, all debt is cancelled. Then you start from scratch with CBDCs and UBIs to stop the screaming. Won't we all be so happy!!
'regulators asleep at the switch and regulating the last crisis (which quite possibly causes the new one), opaque banks holding teetering piles of god knows what, implausible accounting rules that lead to sub-optimal or outright dangerous behavior, monocultures of risk management, and the sudden rediscovery of a variety of kinds of risk from duration mismatch to counterparty non-performance to arbitrary edict by regulators and central bankers that preferences some over others in a manner predictable only by political connection, not some known and knowable rules of commerce and unwinding.'
There is zero difference between the government reaction to the banking crisis and its reaction to the covid 'pandemic'. Rules and regulations are meaningless. The government simply changes them or ignores them.
Is the stupid cabal running the USG truly insane enough to pull that lever and start a hot war with Russia? They've been tapdancing ever closer to the line over the past year, and now that they're well & truly stuck in the coffin corner, there's a nonzero chance they really do say, "Screw it, let's go," and pull the trigger. Burn everything down all around them, bury their misdeeds under the carnage. They don't think it'll be them suffering the fallout, not really. Just we plebes.
"May you live in interesting times" as the saying goes.
"or maybe “wow, if we get this wrong by 0.16% we’re bankrupt” is a level of leverage you do not want your savings or your economy anywhere near."
And THIS is why all $431.23 I have to my name is saved, along with a couple of guitar picks, a hip flask of Jefferson's, and a picture of Rosebud, in a shoe box under my Sleep Number.
And US citizens and residents, and anyone who gets paid in dollars and transacts in dollars, is way up the world Cantillon pyramid. Americans think things cannot happen here which not only can, but are likely about to, at least in the attempt.
We own our house and vehicles outright, but we'd really like to buy land since we live in town. I don't want to sell our current home, but I don't want to be unable to raise what we eat either....
I wish I knew how this was going to play out so I could know what to do.
Current home sale wouldn't completely pay for land, there would HAVE to be a mortgage.
"but at some point, far enough from the wellspring of made up money, this flip and you become a bagholder who is losing wealth. and this cycle rapidly accelerates as people get used to it. you wanna get that cash out of your hot little hands as fast as you can before someone else inflates it away. it’s a race to the bottom."
Stated differently:
When BigFed prints $$ they're just stealing your savings to pay off the debts of the well connected who invested poorly.
I remember talk of Credit Suisse wobbling badly 5-6 years ago. I don't know how they patched that over. Surely it made it worse, since the takeover terms now are "you get nothing". For the last few decades, Deutsch Bank has been hollowed out because it was carrying the sketchy debt of southern European countries. Now the US has sucker-punched Germany with sanctions blowback.
I'm not surprised that banks are failing; I've been thinking they would for decades. My eternal surprise is that they have kept the charade going for so long!
What a financially and economically astute article! One of the best I've read here.
One further point you make implicitly that deserves emphasis is that when there is no disincentive to make bad loans, there is also no *incentive* to make good ones. That means capital and credit stops flowing preferentially to the firms that would put it to good use. "Good use" means producing things people need and being useful generally. So the result of the scenario malo gato describes isn't just the obscene enrichment of elites and the impoverishment of everyone else, it is also breakdown of basic production and services.
Everyone needs to educate their family and friends:
During the plandemic, the reserve requirement for banking institutions was 0%. Yes, it is still 0%.
No bank could survive 0.5% of its depositors pulling their money out.
This is insane.
meltdown = CBDC
I know about as much about banks as I know about quantum physics and statistical analysis program design, which is, it appears, exactly as they have intended. They have WAY too much power and hate the small depositors like me. This is NOT a healthy situation. When their $86 squintillion turns out to be another chimeracle fantasy it will be quite educational to see what is left after the entire world implodes. Meeeooowwww!
Dumbasses and crooks in charge, everywhere you look. And if you stand up and say “Enough”, you’re the crazy one. These highly credentialed buffoons put themselves and us into this mess. This is the culmination of a series of hubris driven experiments that each demonstrated that it was a bad result, and then these asshats did it again until the cake was baked. And the cake is baked. There’s no way to fix this without pain. But the buffoons get re-elected and reappointed and the banks give them donations and they scratch the bankers’ backs. And now the biggest financial mess in the history of the planet. They will temporize. They will try to keep the system from collapsing. They won’t keep jacking interest rates. Total banking system collapse means precipitous societal collapse. Slower collapse via inflation is what they will choose. Less messy. Less obvious. More cover while they sneak out of town and let the next guy deal with this mess.
Excellent but you forgot the escape hatch ... world war .
Easy. If no one owns anything, all debt is cancelled. Then you start from scratch with CBDCs and UBIs to stop the screaming. Won't we all be so happy!!
'regulators asleep at the switch and regulating the last crisis (which quite possibly causes the new one), opaque banks holding teetering piles of god knows what, implausible accounting rules that lead to sub-optimal or outright dangerous behavior, monocultures of risk management, and the sudden rediscovery of a variety of kinds of risk from duration mismatch to counterparty non-performance to arbitrary edict by regulators and central bankers that preferences some over others in a manner predictable only by political connection, not some known and knowable rules of commerce and unwinding.'
There is zero difference between the government reaction to the banking crisis and its reaction to the covid 'pandemic'. Rules and regulations are meaningless. The government simply changes them or ignores them.
You forget option #3.
War.
Is the stupid cabal running the USG truly insane enough to pull that lever and start a hot war with Russia? They've been tapdancing ever closer to the line over the past year, and now that they're well & truly stuck in the coffin corner, there's a nonzero chance they really do say, "Screw it, let's go," and pull the trigger. Burn everything down all around them, bury their misdeeds under the carnage. They don't think it'll be them suffering the fallout, not really. Just we plebes.
"May you live in interesting times" as the saying goes.
"or maybe “wow, if we get this wrong by 0.16% we’re bankrupt” is a level of leverage you do not want your savings or your economy anywhere near."
And THIS is why all $431.23 I have to my name is saved, along with a couple of guitar picks, a hip flask of Jefferson's, and a picture of Rosebud, in a shoe box under my Sleep Number.
You'd be wise to do the same.
And US citizens and residents, and anyone who gets paid in dollars and transacts in dollars, is way up the world Cantillon pyramid. Americans think things cannot happen here which not only can, but are likely about to, at least in the attempt.
since feb 2022 the fed took $600B in t bills and mortgager based security off its balance sheet.
last week it put $300B back on its balance sheet!
the banks should not be covering deposits with long duration us treasury bills. i have shunned long "notes" for over a year now...
but the biden administration is bailing out the silicon valley depositiors!
so every other bank now has e post facto moral hazard protection!!
the grown ups are in charge
no mean tweets and no one hurting anyone's feeling over their ineptitude or vice.
We own our house and vehicles outright, but we'd really like to buy land since we live in town. I don't want to sell our current home, but I don't want to be unable to raise what we eat either....
I wish I knew how this was going to play out so I could know what to do.
Current home sale wouldn't completely pay for land, there would HAVE to be a mortgage.
Subsidized behavior ALWAYS becomes reckless, dangerous, destructive behavior.
"but at some point, far enough from the wellspring of made up money, this flip and you become a bagholder who is losing wealth. and this cycle rapidly accelerates as people get used to it. you wanna get that cash out of your hot little hands as fast as you can before someone else inflates it away. it’s a race to the bottom."
Stated differently:
When BigFed prints $$ they're just stealing your savings to pay off the debts of the well connected who invested poorly.
I remember talk of Credit Suisse wobbling badly 5-6 years ago. I don't know how they patched that over. Surely it made it worse, since the takeover terms now are "you get nothing". For the last few decades, Deutsch Bank has been hollowed out because it was carrying the sketchy debt of southern European countries. Now the US has sucker-punched Germany with sanctions blowback.
I'm not surprised that banks are failing; I've been thinking they would for decades. My eternal surprise is that they have kept the charade going for so long!
What a financially and economically astute article! One of the best I've read here.
One further point you make implicitly that deserves emphasis is that when there is no disincentive to make bad loans, there is also no *incentive* to make good ones. That means capital and credit stops flowing preferentially to the firms that would put it to good use. "Good use" means producing things people need and being useful generally. So the result of the scenario malo gato describes isn't just the obscene enrichment of elites and the impoverishment of everyone else, it is also breakdown of basic production and services.