Is the U.S. Banking System Sound?

24 Mar
Janet Yellen

Is the U.S. Banking System Sound?

“Janet Yellen is one continuous anti-prosperity horror show!”

That’s former US budget director David Stockman’s take on the United States Secretary of the Treasury Secretary.  

It’s hard not to agree.  

Yellen should by now be famous for her long insistence that US inflation was “transitory.”  We are willing to acknowledge that anyone can make a mistake, but Yellen has made a career out of it.  And yet Presidents Obama and Biden appointed her to head the Federal Reserve and the US Treasury, respectively.

Is this the best the United States of America can do?

Don’t answer that!

Here is an account of Yellen insisting in 2017 that there wouldn’t be another financial crisis in our lifetimes:

That kind of cluelessness should be enough to scare the daylights out of you.  Here’s a snippet from ZeroHedge which noted that Yellen has altered a previous statement in which she maintained that the banks are safe.  It must have been obvious that Yellen was protesting too much, and that her track record when she does so is dismal:

Deleted paragraph from March 22:

“As I said last week, the US banking system is sound. The federal government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

New paragraph on March 23:

“As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again. The strong actions we have taken ensure that Americans’ deposits are safe. Certainly, we would be prepared to take additional actions if warranted.

But she removed the “US banking system is sound”, sparking total chaos.

And here is Stockman’s dead-on description of the bailout of the crony-connected Silicon Valley Bank and the consequences:

Nonetheless, Janet Yellen and her fellow Washington clowns got themselves warmed-up last week by bailing-out $155 billion of uninsured deposits at SVB—deposits that had been wantonly put in harm’s way by reckless management on a stock-pumping joy ride.

To wit, between 2020 and 2021 SVB’s assets nearly doubled from $115 billion to $211 billion, while the HTM (securities held to maturity) portion of that balance sheet literally exploded from $17 billion to $98 billion. And more than 95% of this massive HTM book had maturities of 10-years or more!

Here’s the thing. These fools massively mismatched their book even without the safeguard of deposit insurance. What in the world is going to happen when deposits are 100% insured?

… So if nothing else, we need deposit flight and bank failures to purge the bad actors, incompetents and reckless cowboys from the banking industry. Yet the de facto policy is now that no depositor can lose money, no bank can fail and no one’s resume should be besmirched.

Whatever that is, it’s not market-based capitalism. And it’s going to lead to massive waste and malinvestment, not bank-fueled prosperity.

We concur.  Yellen and the rest of the Deep State Money Manipulators are an anti-prosperity – and we might add, a currency destroying – horror show.

Time to buy more gold!