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13th May 2024 > > US banking problems.

Updated: May 15


US banking problems – and boy, there are a lot of those – mean only one thing for the future trajectory of the value of hard assets.

Market Snap

Market Wrap

The boring phase of BTC price action continues.

Curious Cryptos’ Commentary – Banking problems

Klaros Group has identified 282 institutions out of about 4,000 banks in the US that are carrying large unrealised losses on their portfolio of supposedly risk-free US Treasuries (which attract a capital charge of exactly zero percent), combined with high levels of commercial real estate exposure through private and public loans and bonds. In total, these banks have nearly $1 TRILLION of assets marked at par or thereabouts, whilst the real value of those assets is materially lower.

Crunch time for these banks is no later than March 10th, 2025, when the final loans made under the now-defunct BTFP (Bank Term Funding Program) fall due. For some, or likely most of them, the spectre of looming insolvency is somewhat sooner.

Chair of the Federal Reserve, Jerome Powell, knows of this:

“This is a problem we’ll be working on for years more, I’m sure. There will be bank failures. We’re working with them ... I think it’s manageable, is the word I would use.”

Powell refers to his power to turn on the money printer any time he likes.

In a distorted sense of the word, this solution makes any problem “manageable”. But when the Pavlovian response of money printing is applied over and over again, a response that hides the political cowardice that allows both the deficit and the total debt to accelerate beyond any reasonable chance of restoring a semblance of financial sanity, then the problems are not solved. They are merely shelved for another day.

Vast quantities of dollar liquidity are heading our way, make no mistake about that. We all know what that will do to the price of hard assets, the cohort of which includes BTC.

I know little of Klaros Group, but I get the sense that the company ethos rejects the prevailing technocratic approach towards regulation, legislation, and politics. Some might find that challenging, others might find it refreshing.

Best ignore me if you are satisfied with the deliberately engineered democratic deficit required by technocracy, a craft practised by most of our political thinkers and leaders most of the time, rather than actually, you know, thinking or leading.

If, like me, you despair at the rise of the technocratic elite, take heart that their days are numbered, for the application of blockchain technology is an unstoppable force for good that hands power back to where it rightly belongs – with the individual.

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