Results 1 to 5 of 5

Thread: Are Bank Failures a Sign of More Trouble Ahead?

  1. #1

    Are Bank Failures a Sign of More Trouble Ahead?

    Are Bank Failures a Sign of More Trouble Ahead?
    By Ron Paul - 03/21/2023

    The failure of Silicon Valley Bank (SVB) on March 10 was the second largest bank failure in US history. Just two days following SVB’s collapse, Signature Bank joined the record books as the third largest bank failure in US history. First Republic Bank also seemed on the edge of collapse until Bank of America, Citigroup, and other big banks agreed to jointly fund a bailout for it.

    Major Swiss bank Credit Suisse was also teetering on the brink when it received a 54 billion dollars line of credit from the Swiss UBS Group last week. Now, UBS is in the process of buying Credit Suisse. Politicians, regulators, and financial “experts” all rushed to assure us these problems were all caused by factors unique to the individual banks and were not a sign of a systemic weakness in the banking system.

    The bank failures and near failures caused nervous banks to borrow a combined 164.8 billion dollars in one week from the Federal Reserve’s discount window and the Bank Term Funding Program, a new program created by the Fed to make loans to troubled banks. The Fed created this program even though supposedly there is no systemic problem in the banking industry.

    While SVB didn’t receive a bailout, the Federal Deposit Insurance Corporation (FDIC) guaranteed the full amount of all deposits even though Congress set a standard FDIC guarantee on deposits of up to 250,000 dollars. By covering all SVB deposits, the FDIC has created an expectation among depositors at major financial institutions (as well as the institutions themselves) that the government will cover 100 percent of deposits. This will cause both depositors and banks to make investment decisions they typically would not make, thus guaranteeing larger bank failures followed by more bailouts for wealthy depositors.

    Some have blamed the current bank failures, along with other signs that the economy is on the verge of a major downturn, on the Federal Reserve’s interest rate increases. It is true the Fed bears responsibility. However, the rate increases are not the problem. The problem is the “easy money” and low or zero interest rate policies the Fed pushed since the 2008 market meltdown, which was caused by the bursting of the Fed-created housing bubble. Federal Reserve manipulation of the money supply distorts interest rates, which are the price of money. This distorts the signals sent to market actors regarding the true value of investing in particular industries. The result is malinvestments in those industries creating a bubble. The bubble will inevitably burst.

    The economic downturn that follows the bursting of a bubble is necessary to cleanse the economy of the malinvestments. The correction will not last long and the economy will emerge stronger if Congress, the Treasury Department, and the Federal Reserve refrain from “stimulating” the economy with federal spending and artificially low interest rates. Government interference, however, can create yet another bubble, setting the stage for another crash.

    The new wave of bank failures is an indication that the US economy is either in or on the verge of another serious Fed-caused recession. With nations seeking to end the dollar’s status as the world’s reserve currency, the end of America’s disastrous experiment with fiat money, and with it the welfare-warfare state, could be on the horizon. The collapse can be accompanied by civil unrest and greater restrictions on liberty. However, the spreading authoritarianism can also spur a growth in the movement for individual liberty, a free market, and limited government that could make the dark night of authoritarianism a prelude to a new dawn of liberty.
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul

    Proponent of real science.
    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  2. Remove this section of ads by registering.
  3. #2
    A question that arises is this: why are Citigroup and "other big banks" bailing out First Republic? Do they own shares? WILL they own shares as a condition of the salvation? Could they be trying to forestall Congressional action that might cause them great discomfort? Could they be trying to keep Congress from investigations that might send people to prison or shake public confidence?

    Generally speaking, banking has not proven itself the sort of business a rational adult would label as "altruistic", so what's the angle here? I doubt this is coming out of the goodness of their hearts.

    In a world gone mad, no outrage can be validly assumed as beyond the pale of plausibility.

    We get what we tolerate and we deserve what we get precisely because we tolerate it.

    Our words make us the ghosts that we are.

    Convincing the world he didn't exist was the Devil's second greatest trick; the first was convincing us that God didn't exist.

  4. #3
    We had 2008. This is a thousand times worse.

    We are right on schedule to BE REPLACED AS THE WORLDS RESERVE CURRENCY.

    This is not a "fluctuation of the stock market". This is gonna END IN THE END OF THE STOCK MARKET.

    Cloward Piven Strategy final stage. By collapsing the banks, the only way to "save" the bank is to Nationalize them. Collapse the economy, then NATIONALIZE EVERYTHING. Then you have a FULL COMMUNIST REGIME WHERE THE GOVT OWNS EVERYTHING BY FIAT DECREE. The collapse is INTENTIONAL.
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  5. #4

    "Trump was just a chuckle-headed sucker" is not an effective sales pitch.

  6. #5
    "Trump was just a chuckle-headed sucker" is not an effective sales pitch.

Similar Threads

  1. Bank Failures: 127 Down, 800 to Go
    By FrankRep in forum Economy & Markets
    Replies: 1
    Last Post: 09-28-2010, 01:52 PM
  2. Replies: 1
    Last Post: 06-22-2010, 01:38 PM
  3. Just Ahead: Worst FDIC Losses From Bank Failures, Ever
    By bobbyw24 in forum Economy & Markets
    Replies: 0
    Last Post: 01-21-2010, 06:09 AM
  4. 150-200 More Bank Failures Possible
    By FreedomFighter8008 in forum Economy & Markets
    Replies: 5
    Last Post: 08-23-2009, 09:58 PM
  5. Bank Failures
    By Cali4RonPaul in forum Economy & Markets
    Replies: 9
    Last Post: 01-14-2009, 06:56 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts