Cryptocurrency: BANK RUN PANIC Spreads Around Globe, Crypto and Gold Demand Skyrockets, FDIC Coverup

[grarpamp]

> Biden claims "Funds are SAFU", meanwhile continuing
> to claim that outright stealing 50% of your income under
> threat of prison and death is "legitimate taxation", and that
> inflating your purchasing power away by printing money
> for GovPol power excess and pocketing at 35% every
> 10 years is OK... lol...

Bank bailouts ultimately come out of your ass not theirs,
plus the interest on that debt they made payable by your
families for generations to come...


Federal Reserve Launches "QE Extra Lite" To Bail Out Banks

Via SchiffGold.com,

In the wake of two bank failures, the Federal Reserve and the US
Treasury announced a bank bailout program that could be dubbed “QE
Extra Lite.”

Last week, Silicon Valley Bank was shuttered by federal authorities
after the bank suffered significant losses selling bonds in order to
raise capital. When that news hit, depositors rushed to pull funds
from the bank, making it functionally insolvent. Then over the
weekend, federal authorities shut down Signature Bank.

On Sunday, the FDIC created “bridge banks” to handle both insured and
uninsured customer deposits. Banking regulators assured depositors
that they would have full access to all of their funds.

Meanwhile, the Federal Reserve announced a loan program that will
allow other banks to easily access capital “to help assure banks have
the ability to meet the needs of all their depositors.”

The Bank Term Funding Program (BTFP) will offer loans of up to one
year in length to banks, savings associations, credit unions, and
other eligible depository institutions pledging US Treasuries, agency
debt and mortgage-backed securities, and other qualifying assets as
collateral. Banks will be able to borrow against their assets “at par”
(face value).

According to a Federal Reserve statement, “the BTFP will be an
additional source of liquidity against high-quality securities,
eliminating an institution’s need to quickly sell those securities in
times of stress.”

The US Treasury will provide $25 billion in credit protection to the
Fed from the Exchange Stabilization Fund.

This will ostensibly help banks avoid the situation that brought down
Silicon Valley Bank.
Backdrop

Last week, SVB sold a large portion of its bond portfolio at a $1.8
billion loss. SVB CEO Greg Becke said the bank made the sale “because
we expect continued higher interest rates, pressured public and
private markets, and elevated cash burn levels from our clients.”

The bank bought the bonds when interest rates were low. As a result,
the $21 billion available for sale (AVS) bond portfolio was not
yielding above cash burn. Meanwhile, rising interest rates caused the
value of the portfolio to fall significantly. The plan was to sell the
longer-term, lower-interest-rate bonds and reinvest the money into
shorter-duration bonds with a higher yield. Instead, the sale dented
the bank’s balance sheet and caused worried depositors to pull funds
out of the bank.

Many other US banks are likely in the same situation. As the Fed
jacked up interest rates to fight price inflation, it decimated the
bond market. (Bond prices and interest rates are inversely correlated.
As interest rates rise, bond prices fall.) With interest rates rising
so quickly, banks have not been able to adjust their bond holdings. As
a result, many banks have become undercapitalized on paper. The
banking sector was buried under some $250 billion in net unrealized
losses on bond portfolios as of Dec. 31.

The BTFP gives banks a way out, or at least the opportunity to kick
the can down the road for a year. Instead of selling bonds that have
dropped in value at a big loss, banks can go to the Fed and borrow
money at the bonds’ face value.
QE Extra Lite

You could categorize this plan as quantitative easing extra lite.

Understand, this is not exactly QE. The Fed is not buying Treasuries.
It will only hold them as collateral for the loans. Once the loans are
paid back, the Treasuries will go back on the bank’s books.

But it is like QE in the sense that the Fed will create money out of
thin air to make these loans. That is inflationary, just like
quantitative easing, although the inflation is ostensibly temporary.
When the bank pays back the loan, that money will drain out of the
system. Of course, that assumes the loans get paid back.

Also like QE, the Fed is putting its thumb on the bond market by
incentivizing banks and other institutions to hold Treasuries instead
of selling them into the market. In effect, it creates an artificial
limit on the supply of Treasuries, which will artificially keep prices
higher than they otherwise would be.

In effect, this Federal Reserve loan program will have some of the
same systemic impacts as QE, but on a much more limited basis – thus
the term “QE Extra Lite.”
Is This a Bailout?

The powers that be insist this is not a bailout. But it is absolutely a bailout.

The plan creates a mechanism for banks to acquire capital they
couldn’t otherwise access under normal market conditions. Meanwhile,
uninsured depositors will get their money back.

The government can plausibly claim it is not bailing out SVB or
Signature Bank. Both institutions appear to be doomed. But the
government is bailing out uninsured depositors and it is setting the
stage to bail out other banks that would have suffered the same fate
without the loan program.

In effect, the loan program and deposit guarantee signal to other
banks that they have nothing to worry about. It also calms the public
and lowers the likelihood of bank runs.

Will Taxpayers Foot the Bill?

The powers that be also insist this won’t cost taxpayers. Agins, in
one sense, this is true. The US government isn’t going to raise taxes.
And the only way the taxpayer would be directly implicated is if any
of the banks taking loans defaults and Fed taps into the $25 billion
in credit protection extended by the US Treasury. But as Peter Schiff
pointed out in a tweet, the taxpayer will be on the hook for the
inflation tax.

    According to @POTUS the government bank #bailout won't cost
taxpayers any money. That's a lie. While it's true that no one's taxes
will be raised to pay for it, the #Fed will print lots of money to
cover the cost. That's #inflation and everyone will pay higher prices
as a result.
    — Peter Schiff (@PeterSchiff) March 13, 2023

Even if it’s only temporary, the loans will inflate the money supply.
That is the definition of inflation.

And looking at the bigger picture, this bailout likely means the end
of the Fed’s inflation fight.