Silicon Valley Banks taken over by regulators

[Thin Lizzy]

Why should you expect a return on money that you park at a bank for safekeeping any more than you should expect a garage owner to pay you for you leaving your car there? I


Now, if you lend the bank money then you should expect a return but that entails risk.

As usual Prime has it ass backwards. Like every other heavily intervened industry, Banking is so fucked that you can’t even have a real discussion about it.

[Tapeworm]

Why should you expect a return on money that you park at a bank for safekeeping any more than you should expect a garage owner to pay you for you leaving your car there? I


Now, if you lend the bank money then you should expect a return but that entails risk.

As usual Prime has it ass backwards. Like every other heavily intervened industry, Banking is so fucked that you can’t even have a real discussion about it.

Because the garage owner is lending out my car. With fractional reserve he's lending out 10 of my cars and is in a constant state of insolvency even though it isn't exposed until everyone wants their car back.

I'm not saying they have to pay you but if one bank does and the other one charges you to garage your money, the first bank will attract more capital. Not that bank 1 would have kept pace with inflation but little has.

Anyway do you interpret the bailout and industry wide promise to forgive bond liabilities to amount to further socializatuon of the financial system? How much more raping of the tax base is possible before people ask why they're going to work?

[Flexacon]

Why should you expect a return on money that you park at a bank for safekeeping any more than you should expect a garage owner to pay you for you leaving your car there? I


Now, if you lend the bank money then you should expect a return but that entails risk.

As usual Prime has it ass backwards. Like every other heavily intervened industry, Banking is so fucked that you can’t even have a real discussion about it.

Tapeworm gave a good answer, but another way to look at it is the banks want you to park your money there, so they incentivise it because you are the product. Net, long term they look to make money from you by offering you loans, insurance and collecting overdraft fees.   

[Mayday]

Because the garage owner is lending out my car. With fractional reserve he's lending out 10 of my cars and is in a constant state of insolvency even though it isn't exposed until everyone wants their car back.

You guys just touched on a topic 98% aren’t even thinking about.

This is exactly why retail bank rates won’t be going down inline with central bank cuts. Because everybody will want their car back and they’ll collapse due to lack of liquidity.

Banks will avoid a liquidity drain by paying more for deposits and hold rates up to prevent a run on the garage.

[GymnJuice]

As a valued Schwab client and someone with an active interest in their financial future, I am sure you have seen the recent volatility in the financial markets. In light of these events, I want to make sure you are aware of all the resources that are available to you.

The Schwab Center for Financial Research has some of the most insightful experts in the industry – including Liz Ann Sonders, Jeff Kleintop and Kathy Jones – whose regular perspectives are available in the Insights & Education section of Schwab.com. This section also contains a wealth of information to help clients go deeper into investing topics.

Of course, one prominent aspect of recent events is uncertainty in the banking sector, which we are watching very closely here at Schwab. While there is a lot of attention on this topic, I can tell you I remain confident in the long-term resilience of the U.S. financial system and in the protections provided to clients' assets. As an investor, it's important to remember that your Schwab investments held at the Broker Dealer are not commingled with assets at Schwab Bank. For more on all the ways your assets are protected, please visit our Account Protection page.

I got this email. A suspicious person might wonder if they're concerned about the viability of their bank.

[Thin Lizzy]

Because the garage owner is lending out my car. With fractional reserve he's lending out 10 of my cars and is in a constant state of insolvency even though it isn't exposed until everyone wants their car back.

I'm not saying they have to pay you but if one bank does and the other one charges you to garage your money, the first bank will attract more capital. Not that bank 1 would have kept pace with inflation but little has.

Anyway do you interpret the bailout and industry wide promise to forgive bond liabilities to amount to further socializatuon of the financial system? How much more raping of the tax base is possible before people ask why they're going to work?

The garage owner is not lending out your car. He is storing it.

But you are correct that the main issue is fractional reserve banking. It creates a perpetually unstable system that requires a government backstop.

These arguments also assume that inflation is the normal course of action when in an honest system money should be getting more valuable with increases in productivity. Everything is ass backwards.


Regarding Bailouts, the system is so hopelessly intervened the only solution is more and more interventions. Eventually, the whole thing collapses under its own weight. In other words, the patient is too far gone.

[Thin Lizzy]

I'm not saying they have to pay you but if one bank does and the other one charges you to garage your money, the first bank will attract more capital. Not that bank 1 would have kept pace with inflation but little has.

This is only the case because of the government backstop. Without it, you could get wiped out in the bank that’s paying you whereas in the fee bank, you know your money is sitting there.

[Thin Lizzy]

This is the endgame. That’s why the Fed rushed to raise rates when prices started to rise. They knew the jig was up.


Inflation Tops 100% in Argentina As the Price of Beef Spikes


https://markets.businessinsider.com/news/currencies/inflation-100-percent-argentina-food-prices-beef-hyperinflation-economic-crisis-2023-3

[Tapeworm]

The garage owner is not lending out your car. He is storing it.

But you are correct that the main issue is fractional reserve banking. It creates a perpetually unstable system that requires a government backstop.

These arguments also assume that inflation is the normal course of action when in an honest system money should be getting more valuable with increases in productivity. Everything is ass backwards.


Regarding Bailouts, the system is so hopelessly intervened the only solution is more and more interventions. Eventually, the whole thing collapses under its own weight. In other words, the patient is too far gone.

To stop the devaluation are you and End the Fed/ Gold Standard guy?

[Thin Lizzy]

To stop the devaluation are you and End the Fed/ Gold Standard guy?

Ideally but debt levels are so high that there is zero possibility of this happening. If governments around the world were private sector businesses they would have to declare bankruptcy but the money printing option keeps the scam going.

[Mayday]

To stop the devaluation are you and End the Fed/ Gold Standard guy?

The biggest wealth creation event you can live through and people don't want it to happen......

My monopoly example is the easiest way to explain exactly why we need inflationary cycles. If we do not have an inflationary cycle we all lose, even the overlords.

Despite what people say, the intent of an inflationary cycle is not to wipe out your purchasing power.

[GymnJuice]

https://qz.com/the-feds-discount-window-is-lending-to-banks-at-2008-le-1850237214

In October 2008, the month after Lehman Brothers collapsed, the Fed loaned out a then-record $110 billion to banks in one week, through what’s known as the discount window. (This is where the Fed makes liquidity readily available to eligible banks that need it.) That amount is equal to $153.8 billion in today’s dollars.

In comparison, in the week ended March 15, 2023, the Fed lent $152 billion at the discount window—plus another nearly $12 billion under an emergency loan program announced this past Sunday evening in the wake of the SVB failure. (The weekly discount window data is measured every Wednesday.)

Adjusting for inflation, the 2008 and 2023 figures look remarkably similar.