wealththeory on Nostr: Banking Crisis explained simply: We’ve printed money into a fractionally reserved ...
Banking Crisis explained simply:
We’ve printed money into a fractionally reserved ponzi for decades. The hubris got so great that government really thought they could shutdown the economy and pay people to stay at home with printed money during Covid hysteria.
Production stopped, scarcity exposed the excess capital in the system and the consequence of counterfeit dollars chasing fewer goods is inflation.
Now the Fed in its hubris thought they could slow inflation by cranking up interest rates.
One massive problem: the banks are fractionally reserved, and the Fed is offering yields far higher than the banks can pay. This has created a withdrawal vacuum from the banks.
The smallest, most levered banks are failing first, but this problem exists in all fractionally reserved banks.
If the Fed lowers rates meaningfully it will cause inflation to run hot again. If they keep rates high they will continue sucking money from fractionally reserved banks, and those banks will need to be bailed out with printed money or all large deposits will be destroyed.
You may have heard the expression, “you cannot taper a ponzi.” This is what that looks like in real life.
Money printing is a delusional idea and it has real world consequences. It has been repeated throughout history.
See the decline of the integrity of Roman money illustrated below:
The fact that billions of working men and women must sacrifice 40+ years of their time, energy, health, and focus to gain access to fiat currencies that central banks replicate with a keystroke is theft at the largest scale humanity has ever seen.
Cheers!
Published at
2023-05-05 17:59:36Event JSON
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"content": "Banking Crisis explained simply:\n\nWe’ve printed money into a fractionally reserved ponzi for decades. The hubris got so great that government really thought they could shutdown the economy and pay people to stay at home with printed money during Covid hysteria.\n\nProduction stopped, scarcity exposed the excess capital in the system and the consequence of counterfeit dollars chasing fewer goods is inflation. \n\nNow the Fed in its hubris thought they could slow inflation by cranking up interest rates. \n\nOne massive problem: the banks are fractionally reserved, and the Fed is offering yields far higher than the banks can pay. This has created a withdrawal vacuum from the banks. \n\nThe smallest, most levered banks are failing first, but this problem exists in all fractionally reserved banks.\n\nIf the Fed lowers rates meaningfully it will cause inflation to run hot again. If they keep rates high they will continue sucking money from fractionally reserved banks, and those banks will need to be bailed out with printed money or all large deposits will be destroyed.\n\nYou may have heard the expression, “you cannot taper a ponzi.” This is what that looks like in real life.\n\nMoney printing is a delusional idea and it has real world consequences. It has been repeated throughout history.\n\nSee the decline of the integrity of Roman money illustrated below:\n\nThe fact that billions of working men and women must sacrifice 40+ years of their time, energy, health, and focus to gain access to fiat currencies that central banks replicate with a keystroke is theft at the largest scale humanity has ever seen.\n\nCheers! \n\nhttps://nostr.build/i/nostr.build_53f7d2db1589da6da3b474b795f1a84e237c994c224b8afdb1501c8b0a3400b5.jpg",
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