Too much Fed liquidity has led to world of problems
SVB did not have adequate liquidity to tolerate a bank run and did not have adequate solvency to meet its liabilities. Emphatically, however, the failure did not occur because there was too little liquidity in the banking system as a whole. It occurred because there was too much.
At the end of 2022, the US banking system had $18tn in domestic deposits, including an estimated $10tn of deposits insured by the Federal Deposit Insurance Corporation.
That meant there were $8tn of deposits that exceeded the FDIC insurance limit.
John Hussman FT 24 April 2023
https://www.ft.com/content/af8c4d77-cb58-4893-9257-d7bf0f365cbb
Why is it so hard to accept that speculative bubbles can burst?
John P. Hussman, February 2022
https://englundmacro.blogspot.com/2023/01/om-inflationen-vander-ner-och-rantorna.html
Kommentarer