Fear & Panic Strikes Banks | Liquidity Crisis Is Breaking The Financial System

Forex GOLD Investor

The banks are panicking and the Financial system is on a verge of a Crisis and we are talking about a Massive liquidity crisis that's sweeping Across Wall Street we have to realize That the U.S financial system is a Hair's breath away from either historic Collapse or the greatest bailout known To man and the big Banks know it Remember First Republic Bank another Regional lender that is still in trouble Dr stock is down at insane 86 percent Showing that this is at least an Investor run with the bank having a Massive crisis of confidence but what's Crazy is how the big banks are now Pledging 30 billion dollars to shore up The defense of First Republic Wall Street has engineered a coordinated Bailout by pulling money together and Guess who was The Mastermind behind this Janet Yellen the treasury secretary she Talked with the big Banks floating the Idea what if the nation's largest Lenders deposited billions of dollars Into First Republic Bank but for 11 Banks depositing 30 billion dollars to Backstop First Republic tells us the Level of fear on Wall Street this Includes big names like JP Morgan Wells Fargo and City Bank all scrambling to Save the banking system the big banks Are afraid that if another Regional Falls they might be next in line yes we

Know there isn't enough money in the FDIC to show up the insured depositors In fact the reserve ratio is only at two Percent only two percent of insured Deposits are covered with immediate cash The rest will be printed up by the Federal Reserve if First Republic Follows the bigger banks are next and Their stock prices will be clobbered and We don't know how exposed the big banks Are to Falling share prices will their Equity derivatives blow up as well now The big boys are now trying to prevent The fall of the Regionals and are Preempting for a run on the greater Financial system this is extremely Obvious when you look at the amount of Money that's being borrowed from the Federal Reserve in the report by Bloomberg we see the horrible skill of This boring Banks borrow 164 billion From the FED in rush to backstop Location with a t that is an insane Boler of money that just sprang to Existence to help the banks tied over And how do we know that this money was Conjured up from the Multiverse we just Need to look at the fed's balance sheet To see the horrible reverse of QT the Federal Reserve they are pitted up Almost 300 billion dollars to help Wall Street remember the FED is supposed to Destroy liquidity that's supposed to Remove liquidity from the system to

Destroy demand to fight inflation but Now they are reversing costs and pumping Money back into the system but before You start telling me that this isn't a Bailout just take a look at the Definitions a bailout is an act of Helping a person or organization that is In difficulty usually by giving or Lending money and I don't believe a word From Team transitory when they can't Even Define the recession properly back In 2022 let's talk about the federal Reserve's new backstop facility the bank Term funding program and I find it Absolutely hilarious you have to keep Inventing new programs and now is the Bftp but it is interesting you realize That the banks aren't rushing to use the Backstop just yet in fact the Federal Reserve their year marked around 25 Billion dollars to save the banks but Only 11.9 billion dollars was borrowed From this facility the terms of the Backstop seems great for banks basically You can Pledge Your toxic assets to the Federal Reserve as full collateral at Par value this means any bonds or Treasuries you bought before March 2023 Will be valued at full price they could Be down 20 or 30 percent in value but a Federal Reserve will price them at a Hundred percent but here's the big Problem that the Federal Reserve just Can't understand the financial system

Runs on trust and confidence you need to Keep the facade of strength going on if A big bang is seen taking on this Emergency money from the fed this could Trigger a bank run it's like saying yes We made bad treasury bets and we have a Liquidity crisis and that's why we are Crawling to the Federal Reserve for help And this is why the big banks are using The discount window and state they don't Want to trigger another bank run on Themselves we have the big boys Borrowing a record 152 billion dollars From the feds discount window and to put It in perspective that's more money Borrowed versus doing the 08 crisis and This tells us how bad the liquidity Panic is and how big the fear is on Wall Street now the discount window is Basically a short-term Landing facility From the Federal Reserve it's basically A loan shark window for banks where the Fat lends bank money for up to 90 days At high interest rates and we can see The discount window rate is at 4.75 Percent that is a high rate to borrow From and you need to provide collateral As well it's considered expensive money And not a long-term solution and looking At U.S treasuries every single Bond There has a yield lower than 4.75 Percent even the highest yield on the Short end is at 4.6 which is the six Month Treasury and this means Wall

Street can't game the system and borrow Money from the FED for free return the Reverse repo rate is also at 4.5 five Percent so no free money games there as Well the banks are truly borrowing money From a loan shark for their liquidity Issue they rather pay the additional Cost and put up full collateral then use The feds emergency backstop and be Associated with the stigma they know how Important it is to put up an image of Strength but that might not be enough if A bank run truly happens and depositors Get spooked the banks need more money From the Federal Reserve and that's why We have the fat looking to ease the Terms of banks access to the discount Window basically the FED wants to make It easier for banks to borrow money with Their collateral they might actually Remove any collateral penalty for longer Data treasuries that have definitely Lost money this might be another stealth Bailout that's coming under the radar so Let's consolidate how much money the Government has loaned to the bank so far And let's not call it a bailout right And let's just call it a liquidity Lifeline maybe that sounds better and in Total the FedEx loan over 160 billion Dollars from the discount window plus The emergency backstop and let's not Forget 140 billion dollars that's going To save depositors in svb and Signature

Bank so this is 200 billion dollars more In the balance sheet of the banks and Yes the money will have to be paid back And it is expensive money but this Creates a tremendous moral hazard Showing that the banks are Untouchable And they will always get emergency money From the Federal Reserve but this is the Big problem with the entire banking System the moment we went down the Fractional Reserve backing model of Holding 10 5 or less in reserves this Crisis was bound to happen and the Federal Reserve and Janet Yellen has Made things worse with the svb depositor Bailouts the problem with all these Backstops and Landing Windows they Created is how flexible the terms can Get when a liquidity crisis happens it Is meaningless if you can value the Value assets at 100 par value as Collateral it allows for more Speculation down the road and guess what This backstop could increase Exponentially it probably won't stop at Just 25 billion dollars we have JP Morgan saying that the FED could inject Up to 2 trillion dollars in liquidity Into the new back stock program that is A boatload of money with analysts there Saying the usage of the fed's bank term Funding program is likely to be big they Estimated that a realistic number might Just be around 460 billion and this is

Based on the amount of uninsured Deposits at the six U.S banks that have The highest ratio of uninsured deposits Over total deposits that is still an Enormous amount of liquidity that could Be pumped into the system this liquidity Rescue package is going to inflate the Money supply once again it's going to be Cheap money if it comes from the Emergency backstop fund and this is why We are seeing the price of gold Skyrocketing challenging all-time highs In a previous post we mentioned how the Rush to go is obvious in a banking panic When there's fear and especially when There's a bailout people flee to a true Story of value which is gold gold Cracked 1900 at that point in time and Now it's almost at two thousand dollars An ounce showing us that trust in the Financial system is fast eroding if you Keep giving the banks access to an Unlimited amount of money whether you Charge interest or not it is still a Bailout you are creating a moral hazard And reinforcing the idea that they are Truly too big to fail through this Readable gambling mentality isn't going To stop and I don't blame the banks of Course the banks are going to take Advantage of the lending programs they Are just responding to the incentives Don't hit the player hit the game the FED has made a terrible mistake and the

Treasury has also trapped themselves we Have Janet Yellen Under Fire from Congress answering very tough questions That reveal a lot and I want us to focus On the line of questioning doing the Hearing with the Senate Banking Committee and this reveals the daily Path we are headed towards a banking Consolidation that we have talked about A lot now the Highlight is Janet Yellen Telling the world that not all uninsured Deposits will be protected in future Bank failures Senator James Langford Asked Yellen will the deposits in every Community Bank in Oklahoma regardless of Their size be fully insured now will They get the same treatment that svbs Signature Bank received and this is Where things get spicy Yellen admitted That they would not saying uninsured Deposits would only be covered in one Instance only in an event that a failure To protect uninsured depositors would Create systemic risk as significant Economic and financial consequences Basically if you are too big to fail you Will get a bailout or at least your Depositors will be protected and this is The big worry that Langford brought Forth he's foreshadowing the big risk That could collapse the smaller Regional Banks saying I'm concerned you are Encouraging anyone who has a large Deposit at a community bank to say we

Are not going to make you whole but if You go to one of our preferred Banks we Will will make you whole this to me is The real danger of this entire svb Bailout debacle The Treasury is trapped They obviously can't bail out everyone Without creating an insane inflation Crisis but if they don't the big Banks Or the G6 are going to become even Stronger down the road we might see a Banking consolidation sooner or later There could be more risk taking a bad Bets because now being too big to fail Is becoming a reality and according to Routers more than 9.2 trillion of U.S Bank deposits are uninsured so just Imagine the scale of money printing that Will happen if the unthinkable happens And this will make the 08 bailouts or Even the 2020 money printing event look Like Child's Play so here are the cliff Notes the Federal Reserve has screwed The economy and they are stirring a Bigger inflation crisis down the road Through her testimony Yellen has told us That the big banks are virtually too big To fail and they will have to save them If something happens and now things are Getting out of control we have a Correlation of mid-sized Banks asking The f the IC to ensure deposits for two Years they want an unlimited backstop And here's why deposits have been moving To the big Banks people on the street

They know what's up they are not stupid The safest place right now is in a bank That's too important to the system That's too big to fail just take Credit Suisse for example they have just Borrowed 54 billion dollars from the Swiss Central Bank they had a bailout And we can expect this to happen in the United States if another big Bank starts To shake Credit Suisse is adhesive or Systemically important bank and that's Likely why they were tossed a Lifeline The stakes have just increased because Now the Federal Reserve spelling sheet Is bigger they have to QT away sooner or Later and rates are still going to hit Higher at least in the short term so Just imagine the chaos at five or six Percent interest rate which gasket will Blow which part of the economy will Collapse again and if more Banks start To crash If the Fed prints money to save The banks this inflation crisis will Never end but let me know what you think In the comments hello will more Banks Collapse in the weeks to come will the Federal Reserve dare to hike rates Further let me know in the comments Below stay safe be sure to smash the Like button and subscribe as we navigate Through these crazy times

Forex GOLD Investor

You May Also Like

Learn How to Buy Gold | GET YOUR FREE RESOURCE | Learn How to Invest in Silver and Other Precious Metals | GET HELP WITH THIS FREE PACK ->->-> >> CLICK HERE TO GET <<Close