Replying to Avatar Joda

Small amounts of capital are insured, so there isn't much to worry about in terms of bank runs. Plus we already know the government can prevent almost all bank failures.

But if there is that capital flight, it may just be to bonds, which are more attractive with high interest rates anyway (and still seen as safe, even if we just collectively ignored the downgrade).

We could actually see rates just kinda wobble within a range for a few years. Shake out some garbage without causing too much chaos.
Avatar
Guy Swann 1y ago

The problem still there though would be the staggering amount of low rate bonds on the banks' balance sheets. That have already been underwater for a few years, and would only get far worse. Then the commercial real estate exposure for banks like JP Morgan will get massively hit too. They will keep running into huge problems if they have to conjure trillions out of thin air to pretend the whole banking system isn't insolvent, at the same time they have to raise rates further to keep inflation in check.

Just gonna be a huge fucking mess it seems like to me.

Reply to this note

Please Login to reply.

Discussion

d0
d0708145... 1y ago

Yep. The shit's gonna hit the fan sooner or later!

Avatar
curt finch 1y ago

the US dollar has an enormous Metcalf effect that won't go away in the next 9 seconds no matter how broken it appears to be to us

how many of the people in the world have touched a dollar versus a sat?

we the people appear to have an extraordinary ability to export inflation to other countries via our reserve currency and they'll probably keep taking that abuse for a long long time

which definitely gives us some time to stack