Loading ...LETS TAKE THE EMOTION OUT OF THE BANKING SYSTEM SITUATION
THIS IS THE DEFINITIVE EXPLANATION OF OUR BANKING SYSTEM …WHAT IT IS HOW IT WORKS AND WHAT ARE THE RISKS TODAY AS OPPOSED TO OTHER BANKING “CRISES” ( IE 2008 )…
Hint…as smart as some of us think we are we mostly don’t have a clue how the Banking System sets up nor how it really works…(until NOW )
………………
Lyn Alden explains
https://www.lynalden.com/march-2023-newsletter/
Fully Disclosure …OK I read it and I can say that I unerstand about 60% of it …but the rest is over my head !
The take away is that for 99% of us mere mortals the Financial / Banking System is too complex to get a real understanding of….All we can do is leave it to the Financial Alchemists / Wizards to keep it afloat and hope to hell they know WTF the are doing .
sheesh
“The take away is that for 99% of us mere mortals the Financial / Banking System is too complex to get a real understanding of”. Therein lies the problem.
Once you understand, you’re not up against ‘humans’ (cause they are not), you begin to understand it is a whole different ball game.
“So, the irony of the situation is that a bank can literally fail even if they hold 100% nominally risk-free assets that are guaranteed to be paid back in full. If a bank uses depositor funds to buy those assets at low interest rates for lack of anything better to buy at the time, and then those assets go on to trade at a discount due to higher interest rates by an amount that exceeds the bank’s capital, and then the bank is forced by a depositor run to sell those assets for a realized loss rather than holding them to maturity and getting their money back as they intended, then the bank is bankrupt.”
Just call it a complete mismanagement. Why banks invest in Gov-debt while interest is record low, then any MBA-graduate (or 10 year old) knows that the day of reckoning will come.
Even bank management (et all) have been educated eg. indoctrinated into complacency without thinking for themselves; sure go ahead as GOV has regulated to do so and I (CEO) want to be a good-old-boy being compliant with any big brother.
The problem indeed is (as always) the GOV as GOV decreed/demanded to pension funds (at least the EU-pension funds) to invest much (if not all and only) in GOV-debt securities.
For example in EU: a pension fund investing in PM, Goldminers or even regular stock market is little to none; it is practically NOT ALLOWED and if allowed only by a very small %. Hence, all (EU) pension funds are actually insolvent (which is just another way of telling them they are bankrupt) as they invested in negative yielding Gov-debt while they actually need 7% annually. A simple calculation will confirm the years of (EU) negative interest rate times the number of years (and compounding) makes a pension fund in reasonable time not being able to meet its obligations and POEFFF ITS’ GONE.
At least that is the EU-pension problem and is why ‘they’ want to replace it with CBDC to avoid PITCHFORKS which (IMO) cannot be avoided for many other reasons.
ALL BY DESIGN.