The banking crisis is like a smokescreen

Outstanding experts have written a huge amount of materials about what is happening in the US banking system in the last ~ week

The banking crisis is like a smokescreen

But in simple words, without extra volatile liquidity, analysts are probably shy. Therefore, I offer a short morning reading.

The crisis itself is entirely man-made, it is provoked exclusively consciously and purposefully.

For two whole years, approximately from ~January 2020 to ~December 2022, money was literally handed out to the entire banking and financial community by force.

But this carrot also has a stick – as long as the brethren regularly lent their own government at the same low interest rate (bought American bonds, those very treasures, Treasures), everything was fine.

But at some point, tentatively in ~October 2021, the brethren believed in their immortality and decided to try to make money on all sorts of other things, it doesn’t matter which ones.

At this point, the government begins to feel the increase in rates on 2-year bonds from the notional 0.25% to 0.5% and beyond.

Remember, the main thing is not the amount of your debt, but at what percentage you took it, i.e. service cost.

And now the government, feeling discomfort, begins to reason with the financial circles by raising the rate. But the main goal here is not the rate itself and inflation that is not shown to everyone. The main thing is to provide yourself with comfortable conditions for your loved ones, to borrow as before, preferably at 0%, but 0.25% is also quite good.

And the mechanism for communicating this basic information is simpler than ever – you can only trust the government and it has the highest credit rating.

Those in order to borrow cheaper back, you need to block other ways to save your money. And before our eyes, the crisis that is being blown up is precisely a demonstration of the unreliability of banks. Calculations are simple as a teapot.

30 trillion of debt is ~300 billion annual payments for every 1% debt service rate.

And they don’t like to pay.

Therefore, banks will be burned as much as is necessary to reduce the rate on treasuries. Everything else is deeply secondary.


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