Paul Craig Roberts – paulcraigroberts.org May 4, 2023
As I reported at the time, the banking crisis is not limited to Silicon Valley Bank. Silicon Valley Bank’s failure was followed by the failures of New York Signature Bank and First Republic Bank of San Francisco. Now three more banks have had their stock prices collapse–Western Alliance, PacWest Bankcorp, and Metropolitan Bank.
As I have emphasized, the Federal Reserve’s higher interest rates are the cause of the bank troubles. The decade of zero interest rates left banks with portfolios of low interest rate assets on their balance sheets. As the Federal Reserve raised rates, these assets declined in value. Depositors saw that the banks were technically insolvent and withdrew funds. Others withdrew funds because they can now get higher interest rates from money market funds.
Banks losing deposits are subject to runs. Expecting the worse, shareholders sell their holdings of the banks’ stocks. As the banks lose market value, troubles increase.
The Federal Reserve is causing a banking crisis, because the Federal Reserve imagines that the inflation is a monetary inflation and not an inflation resulting from supply disruptions caused by Covid lockdowns and Russian sanctions. If the Federal Reserve succeeds in throttling the economy with higher interest rates, supply problems are aggravated by reductions in production. In other words, as usual, the Federal Reserve’s policy is counterproductive.
I have always been amazed that Americans look to government entities for solutions when incompetence is the main attribute of government.
The more the banks collapse the more my preps are worth. Not cash value, survival value.
As usual, we get half truths and misdirection from Roberts… This inflation is not because of supply issues, this inflation is because the petro-dollar is dead. The USA have been printing like there is not tomorrow for decades, and got away with it because they would bully other nations into submission. Now that other powers exist, and can resist the USA military, there is no reason to submit to the US money printing machine. So the dollar gets inflated, and it is only going to get worse from here. Interest rates are extremely low by the FED, but they don’t dare raise them because their banks are bankrupt, the whole system is broke, a huge fake money bubble ready to burst. There is no saving it.
Yes Paul, but again you ignore the ‘white elephant’ in the room. Jews are closing down the banks, after taking out their profits. They’re covering up their criminality.
This Former Treasury Secretaries take here:
“I have always been amazed that Americans look to government entities for solutions when incompetence is the main attribute of government.”
Makes him a hypocrite. He sits and writes about how bad it is, when he was part and parcel of its machinations. He calls the US a democracy, when its supposed to be a Constitutional Republic. And you wonder why the FED GOV has continued on its downward trajectory.
The REAL reason these banks are in controlled demolition is to pave the way to enforce CBDC uptake. They are collapsing all the banks that they don’t think would Toe their line. Best buy the Things you need before they make all money trackable/trendable/programmable. Hell, they’ll probably treat it like Stocks, where the better classification can buy anything but lesser classifications are limited in what it can be spent on. Alot like the insurance scam where ones credit rating determines how much the insurance company gouges you.