Last Thursday, Bloomberg reported that federal regulators are preparing a proposal to force US banks to utilize the Federal Reserve's discount window in preparation for future bank crises.
If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank.
The Fed's explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.
The regulator's concerns about bank fragility are justified.
Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral.
While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public.
With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank.
https://mises.org/wire/fed-prepares-bank-crisis-while-telling-americans-economy-strong
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