Don't let those stock market-trading normies tell you otherwise :)
Saturday, March 18, 2023
Too Big to Succeed - Rates, Bank closures and impending market turmoil
Current market conditions are rocky to say the least. It’s pretty obvious that bank stocks failing is spreading a good deal of market fear. I’ve listened to lots of economists saying that they do not foresee a broader market sell off nor additional banks failing. However, I do not believe this to be the case for a couple of reasons.
- The fed response to the banking crises has been, dramatic to put it lightly. Deciding to cover far beyond the limits of 250k FDIC insurance is literally unprecedented. Many see this as an act of goodwill to assist stabilizing the market. I can’t see any way that this should be seen as “a good thing” - the fed is concerned about greater market affects of these banks and it seems to me, they worry more will fail.
- Banks continue to face issues with liquidity for bank runs. Signature Bank and First Republic bank both experienced these same issues and failed for the same reasons. These are not insignificant events and they are related to one another. The only way First Republic was able to claw their way out of catastrophic failure was because major banks deposited their cash at First Republic to keep them solvent.
- The fed is now completely backed into the corner and has no good options to fix things. Inflation is still absurdly high and that continues to be the main issue. The fed can’t use quantitative easing without incurring further inflation cost. The rates path is also extremely tricky as the market will react accordingly. If they don’t raise rates as much as they are expected to, the market will assume that means that the banking issue is far worse than we know. If they do raise rates the same as they have been, they will continue to exacerbate existing issues with bank liquidity.
These three things are weighing heavily on my mind. At this point, the effects of raised rates are only just starting to show themselves (as evidenced by this current crisis). If we are already seeing banks fail, imagine what will happen when more banks fail combined with 6% inflation YoY.
Hold your chips close folks, this shit hasn’t even hit the fan and we’ve already had one of the biggest banks in US history collapse.
Positions: cash, gold, bitcoin I guess if you believe that fuckin grift.
Disclaimer: I am not a financial advisor, use this information at your own discretion.
Are those in power going to give it up without a fight?
Am I the only one who feels really uneasy about the so called elites and what they will come up with next to regain controll of the current monetary system?
I fear we are about to see some kind of shock and awe event in the form of war, disaster, or other to distract and prevent the masses from adopting bitcoin.
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