Small bank depositors are leaving smaller banks in droves and flooding the bigger banks hoping they are "too big to fail". I believe that is a trap to accumulate as much money as possible into the "big banks" so that they can impose the new digital currency on all of us. They ABSOLUTELY HAVE TO go digital because that's the only way they can make interest rates negative. Unless rates drop dramatically like, right now, all of the US Government bonds banks are holding will have to be sold off with massive losses when depositors demand payment. Game over.
Dropping rates will buy some time but that will cause inflation to go parabolic destroying asset values like a nuclear bomb. There are no good choices left for the Fed; either allow banks to fail or scorch the economy with hyperinflation.
According to Bloomberg, bank CEO Greg Becker asked creditors on a call Thursday to "support the bank the way it has supported its customers over the past 40 years"—as if any bank run had ever been stopped by asking nicely.
The losses in SVB's Treasury portfolio—courtesy of the Fed's quick rate hikes, which crashed the bond market last year—amount to billions of dollars in unrealized losses. The accounting rules of "held to maturity" allows banks to ignore mark-to-market losses if the securities are intended to be held until they come due. Of course, holding to maturity requires you to finance the securities in the meantime, something that's pretty much impossible when your customers don't think you'll make it and instead are demanding their deposits back en masse.
No, it wasn't SVB's "woke" policies which led to the meltdown; although for any bank to donate millions to social causes like BLM is not considered part of a normal banking model which should prioritize shareholder value regardless of how virtuous or noble those causes may seem.
"You may have noticed that the value of your money has been slip-sliding away the past year or so. Peanut butter at five bucks a jar, and all. The situation at hand kind of guarantees that we’ll be seeing a whole ole lot more of that. And then the gods of money will have lost control of the interest rate console altogether. No more tweaking the broken knobs. More inflation will prompt US treasury paper holders to dump what they can while there’s still some value to retrieve. But the US has to issue more debt for all the bail-outs and theoretical buyers of new debt will perforce bid up the rates to keep up with inflation… and yet the US can’t possibly bear the burden of paying higher interest on its debt. Looks like the business model for running the USA is breaking down before our eyes."
This doesn't mean the world is ending and banking is not dead, it just smells funny right now.
There will be convultions and plenty of finger pointing - name calling and recriminations to go around. Ignore them.
The best way to protect the value of the money you already have is to keep a healthy portion of it outside the banking world, preferrably on hard assets like Land, Gold, and even Bitcoin which can still be used for transactions if/when banking seizes up completely. That is a distinct possibility and, yes, it HAS happend before many times in this country.
Fortunately, you all have a lender who refuses to buy or sell bullshit - call me if you have questions or need working capital. I am wiring funds every day to business owners.