Is Banking In America About To Be Fundamentally Changed Forever?
By Michael Snyder/Economic Collapse BlogMarch 14, 2023
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Did you think that the Federal Reserve was just going to stand by and watch the U.S. banking system completely collapse?
In response to the stunning failures of Silicon Valley Bank and Signature Bank, the Federal Reserve announced a rescue plan on Sunday evening that is going to radically change banking in America forever. All deposits at Silicon Valley Bank and Signature Bank will be fully guaranteed and will be available on Monday.
Of course the Federal Reserve can't just make an exception for these two banks. If they are going to do this for them, that means that they are going to have to do it for everyone else too. So what this means is that from this point forward the Federal Reserve is essentially promising to guarantee every bank account in America. Considering the fact that more than 19 trillion dollars is deposited with U.S. banks, that is quite a promise to make.
I want to show you that I am not exaggerating one bit. The following is the announcement about this new plan that was just posted on the official website of the Federal Reserve...
To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.
The Federal Reserve is prepared to address any liquidity pressures that may arise.
The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. 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.
With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.
After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, approved actions to enable the FDIC to complete its resolutions of Silicon Valley Bank and Signature Bank in a manner that fully protects all depositors, both insured and uninsured. These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy.
The Board is carefully monitoring developments in financial markets. The capital and liquidity positions of the U.S. banking system are strong and the U.S. financial system is resilient.
Depository institutions may obtain liquidity against a wide range of collateral through the discount window, which remains open and available. In addition, the discount window will apply the same margins used for the securities eligible for the BTFP, further increasing lendable value at the window.
The Board is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.
Please don't just skim those paragraphs.
Take the time to read them in detail, because what the Fed just did literally changes everything.
From now on, nobody will have to worry that their bank will fail, and the Fed has decided to completely end the war against inflation.
If the technical language confuses you, here is Zero Hedge's translation...
Translation: the Fed's hiking cycle is dead and buried, and here comes the next round of massive liquidity injections. It also means that the Fed, Treasury and FDIC have just experienced the most devastating humiliation in recent history - just 4 days ago Powell was telling Congress he could hike 50bps and here we are now using taxpayer funds to bail out banks that have collapsed because they couldn't even handle 4.75% and somehow the Fed has no idea!
That analysis is right on the money.
I warned that our system could not handle higher interest rates, and higher rates were directly related to the collapse of Silicon Valley Bank.
So there won't be any more rate hikes.
In fact, I wouldn't be surprised at all if the Fed started cutting rates very soon.
In addition, all of the fresh money that the Fed will be injecting into the financial system now will be highly inflationary.
We are being told that the Fed's plan won't cost taxpayers a dime, but the truth is that inflation is a tax on all of us.
So the financial community may be praising this "extraordinary intervention" by the Fed, but there will inevitably be a very high price to pay for spraying money around so recklessly.
But what other choice did the Fed have?
As I have repeatedly warned my readers, our fundamentally flawed system simply cannot survive without artificial support.
As a result of the Fed's reckless rate hiking strategy, U.S. banks are now sitting on 620 billion dollars of unrealized losses.
That is "billion" with a "b", and that is a ticking time bomb that is not going to go away any time soon.
Meanwhile, the housing bubble is imploding, we are heading into the worst commercial real estate crisis in all of U.S. history, and now faith in the U.S. banking system has been greatly shaken.
This crisis is not even close to over.
And every time there is a new eruption somewhere, the Fed will try to put the flames out with generous injections of fresh liquidity.
Virtually everyone applauds when the Fed starts spraying money around, but by now all of us should realize that this story is not going to have a happy ending.
Many believe the endgame of where we are heading is the widescale acceptance of digital currency controlled by the Federal government. With the loss of confidence in the banking system the Government will ride in to rescue the day but the price of that "security" will be complete and total control over everything in the monetary system.
Central bankers will be able to see what is in your bank account, who you transact with, what you purchase, and anything else they are curious about in your financial life. That full transparency with the state removes all elements of privacy, while also giving the institutions the ability to censor any and all transactions, regardless of whether they have a legitimate reason or not.
Anything and everything that requires an exchange of currency can be monitored, and transactions can be denied for such things as firearms, meat, or other (currently) legal but politically incorrect purchases. Already the World Economic Forum is launching a coalition to reward people with "carbon credits" for using fewer resources. Digital currency will also allow the government to seize assets at will.
This is the type of power and economic system the Book of Revelation describes where no one can buy or sell without the 'authority' of the Beast and his mark.
Digital currency makes this all possible and thanks to current events, it may be a lot closer than you think.