Inflated Expectations

By Ted Dieck | Recruiter’s View - Bank Failures - Financial Markets | Mar 16, 2023

The Federal Deposit insurance Corporation (FDIC) “protects your money in the unlikely event of a bank failure.  The standard insurance amount is $250,000 per depositor, per insured bank…”

In the case of Silicon Valley Bank, 97% of all deposits (by value) were uninsured.
These were deposits beyond the $250,000 cap.

That Just Changed

In a joint statement, the Treasury Department, Federal Reserve, and FDIC announced that ALL DEPOSITS would be covered.
And that includes the newly defunct Signature Bank of New York.

Here’s The Cycle

The US Government increased debt by astronomical amounts over the last two years.
There’s no money to pay for that, so the Fed “printed” more money.  A lot more.
Printing a lot of money causes inflation.

Now we have inflation.
To reduce inflation, the Fed raised interest rates.
The higher cost of everything has inspired massive tech layoffs, and now bank failures.

To save the bank depositors, the Fed has promised enormous piles of money (that it doesn’t have.)
Since the Fed doesn’t have enough money, it will “print” more money.  A lot more.
Printing a lot of money causes inflation.

Soon we have even more inflation.
Etc.

-TD