Are You Prepared for More Bank Trouble?
You’re not prepared if you don’t own gold and silver
Silicon Valley Bank. Signature Bank. First Republic Bank. Credit Suisse.
Now we’re hearing rumors of deep trouble at German banking behemoth: Deutsche Bank. That comes as no surprise to us. We were writing about Deutsche Bank’s troubles last year, HERE and HERE.
How many more are there like the foregoing? No one knows. Federal Reserve Chairman Jerome Powell insisted last week that SVB was a one-off, an isolated event, and not something systemic.
We call balderdash (or something stronger) on that!
Let’s have David Stockman explain the basics. Between February 2022 and the interim rate peak in October, he tells us, yields on 30-year mortgages and 10-year US treasuries doubled in a matter of months.
Well, of course, they did. The Fed was embarking on its rate hike program. Stockman details what happened next:
That caused bond prices to fall sharply and the resulting level of unrealized losses on fixed income securities held by the banking system to literally explode. That’s just freshman bond math, and should have been on the dashboard of everyone who inhabits the Eccles Building, save perhaps for the janitors.
… And then in absolute and utterly predictable lock step with the Fed’s rate raising campaign and the resulting soaring bond yields, impending trouble at the OK corral literally screamed out from SVB’s financial statements. By July last year it was already evident that unrealized losses of $14.2 billion amounted to nearly all of the company’s book equity. And besides that, it also had $150 billion of uninsured and potentially flighty deposits.
Yet these dunderheads spent the weekend wondering what happened?
Yet these dunderheads are also now telling us that SVB, which accounted for just 2.5% of the unrealized losses in the banking system at year-end, was some kind of aberration. And that the rest of the system is sound and healthy.
Well, if they couldn’t see the sequence below as it happened, how in the world do they know what is happening just below the surface in today highly fragile financial system, freighted-down with unprecedented levels of debt…?
Ron Paul says that the new wave of bank failures along with foreign nations ending the dollar’s world reserve currency status are indications that the US economy is either in or on the verge of another serious Fed-caused recession. It looks like “America’s disastrous experiment with fiat money” is coming to an end, he says.
That appears to be the case. And if it is so, there is no better monetary protection than gold and silver.
As for Powell’s assertion that Silicon Valley Bank’s failure was an outlier, it reminds us of his claim that America’s resurgence of inflation was merely transitory. That was two years ago.