An Economic Lifeline with Dire Consequences
In an attempt to rescue ailing banks, the Federal Reserve is poised to pump an additional $2 trillion into the United States banking system. This action will almost certainly instigate hyperinflation, further devaluing the dollar.
JPMorgan Chase strategists have been deliberating the Fed’s new “emergency” lending program, the Bank Term Funding Program, in light of the collapse of Silicon Valley Bank (SVB) and other financial institutions. This program aims to conceal the financial corruption that led to the current crisis, ultimately causing increased inflation and a reduced standard of living for everyday Americans.
JPMorgan analysts have suggested that the $2 trillion figure is the maximum amount available for usage, at least until it is inevitably increased, as has been the pattern with the debt ceiling.
Financial Precipice: U.S. Banks Face $620 Billion in Unrealized Losses
The U.S. banking system reportedly holds reserves of around $3 trillion, with most of it held by the largest banks. Smaller banks, many of which are in even direr straits, are the most likely to take advantage of the Bank Term Funding Program.
Mid-sized banks, like the now-defunct SVB, have already faced significant losses, leading to a domino effect of bank collapses. Federal Deposit Insurance Corporation (FDIC) chair Martin Gruenberg has warned that U.S. banks collectively face unrealized losses on their bond holdings of approximately $620 billion.
These unrealized losses undermine the ability of affected banks to meet their liquidity needs, as less cash is generated when sales occur, causing regulatory capital to fall below required thresholds. Despite these troubling circumstances, Gruenberg insists that America’s banks are “generally in a strong financial condition.”
However, as the Fed continues to inject emergency liquidity into the banks’ balance sheets, it is the American people who will pay the price. The Fed’s new funding facility allows banks to borrow from the Fed for a one-year period, using their securities as collateral at par value instead of market rates. As long as the Federal Reserve and other central banks are permitted to print an infinite supply of “money” without restraint, the burden on everyday Americans will persist.