High Inflation, Or Bankrupt Banks?

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In this video, I discuss how the Federal Reserve and other central banks must ultimately choose between allowing inflation to run hot, or attempting to control inflation and blowing up the banking system instead.

After signaling that they would keep monetary policy loose, the Fed raised rates at the fastest rate in 80 years and thus rendered large swathes of the US banking system insolvent. To add insult to injury for banks, the Fed has kept the yield curve highly inverted, which also blows up banks' basic business model of borrowing short and lending long.

If the Fed doesn't cut rates soon, banks will continue to blow up.

If the Fed does cut rates, inflation will continue to run hot.

That's the problem with being at the end of the long-term debt cycle-- there are no good choices left.

Not investment advice! Consult a financial advisor.

Total public debt in the US:
https://fred.stlouisfed.org/series/GFDEBTN

Powell: ‘We’re Not Even Thinking About Thinking About Raising Rates’:
https://www.wsj.com/video/powell-were-not-even-thinking-about-thinking-about-raising-rates/0C020333-947B-411F-912E-6EF76EFE18C0.html

Chairman Powell says higher inflation is temporary, fed will be ‘patient’:
https://www.pbs.org/newshour/economy/chairman-powell-says-higher-inflation-is-temporary-fed-will-be-patient

Fed Funds chart:
https://fred.stlouisfed.org/series/FEDFUNDS

Silicon Valley Bank went for extra 40 bps yield and blew itself up:
https://www.businesstoday.in/silicon-valley-bank/story/silicon-valley-bank-went-for-extra-40-bps-yield-and-blew-itself-up-what-is-mbs-that-triggered-the-collapse-373181-2023-03-13

Bank of America savings rates:
https://www.bankofamerica.com/deposits/savings/savings-accounts/

Vanguard money market rates:
https://investor.vanguard.com/investment-products/mutual-funds/profile/vusxx

US Treasury interest rates:
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202306

IMF warns central banks of ‘uncomfortable truth’ in inflation fight:
https://www.ft.com/content/7d3276bb-8ef8-444c-8356-2792a6f58a24

Bundesbank may need recapitalisation to cover bond-buying losses:
https://www.ft.com/content/46d3952a-5ee2-431a-8430-4a71e530cbce

How the Fed went broke:
https://www.lynalden.com/broke-federal-reserve/

I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos. My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.

#fed
#inflation
#banks

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