Can FDIC Avoid Disaster?
Simple Math
Crazy thing is everyone is onboard, but where were all the analytics for a bank run before March 8th? This is not new, anyone that understands modern day monetary mechanics, knows that the fractional reserve system is a fiat debt based system with 10x leverage. I.E. with $2.3T in cash and $17.6T in deposits, doesn't take a genius to figure out that a little spark is all that is needed and that QE is not some sort of magic wand of wealth, rather a stealth thief of future labor per unit wage. Yet all of a sudden everyone is an expert on banking...problem is nobody had the balls to call this, but a few of us for years stating this obvious fact. Fiat = Trust and when you lose this so exposes the central bank system.
Now you have Inflation forcing central banks to raise rates and the collateral damage was always obvious, when you have inverted yield curves and a 2Y Govt Risk Free Rate of > 4% it was only a matter of time before the banking system was going to see deposits flee. Why would anyone store capital at 0.50% when the risk free rate was 4% higher? Well doesn’t take a genius to figure out the banks NIM was going to collapse as there is a limit to how high you can push credit rate debt but not a limit on your potential earnings loss on your NIM…so bring on the first casualty Silicon Valley Bank.
This is not an isolated event, rather something that has been brewing ever since the FOMC decided to hijack financial markets with concentrated risk and balance sheet levered players who can move markets by sheer force…well last Friday you saw that limit, that singularity and now comes damage control.
Will it work? Will the FDIC convince enough people to not pull the rug out? Every year Magnelibra posts “Its a Wonderful Central Bank Life” updated version for a given year. In this article we highlight the movie Its a Wonderful Life and its bank run scene. We urge you to read this post, linked here, Its a Wonderful Central Bank Life 2022 Version
So, with everyone onboard now and with everyone now so called “Experts on Monetary Banking Systems”, we want to know where were all these Experts and all the analytics for a bank run before March 8th?
This is not new, anyone that understands modern day monetary mechanics, (all of you who read our work) know that the fractional reserve system is a fiat debt based system with 10x leverage. I.E. with $2.3T in cash and $17.6T in deposits, doesn't take a genius to figure out that a little spark is all that is needed and that QE is not some sort of magic wand of wealth, rather a stealth thief of future labor per unit wage. Yet all of a sudden everyone is an expert on banking...problem is nobody had the balls to call this, but a few of us for years stating this obvious fact. Fiat = Trust and when you lose this so exposes the central bank system. Who hope this graphic explains things in their most simplistic forms:
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. Magnelibra the CTA and its Global Futures Benchmark Program may hold long and or short positions in the various futures and markets that Magnelibra covers. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.
ALL RIGHTS RESERVED 2023