If you remember the 'talk'....this was geared to be a COVID-19 economic and stimulus package....worth about $1.9 trillion.
So what happened over the past two years? Basically....inflation took off. Partly because of the 2021 act, and partly because the actions of the Biden team to prevent inflation....failed.
What the fed did in the past year? They basically went to raise interest rates, which shocked a lot of people because the value of bonds 'changed'. Banks didn't see this value spiraling, and thus....you created a path of uncertainly for banks and clients.
Here you stand....on this Monday, with a bank meltdown....mostly waiting to see is a second, third, fourth, and fifth bank join in the meltdown.
All of this....to avoid the dreaded invention of inflation that the Biden 'camp' can't really talk about or address in public.
It is kinda funny.
Remember....all of this came from three years of Covid.
Also....going back to 1917....the 'Spanish Flu'.....Prohibition....fabulous twenties....NY banks tied to massive bank loans to Germany to settle WW I debt to France, UK and US, economic blast-offs/drops every few months, and then reacting to the 1929 bank failures. Yeah, this is a lot of history we don't discuss today.
1 comment:
Two from me in a day. You must feel so honored. I like your relatively short posts. I also worry that you may have actually lived through the 1929 crash, and are thus just days away from a long dirt nap.
I may or may not (plausible deniability, and remember I may or may not be a cat) have spent some time in the Fixed Income world, and most old-timers will tell you that interest rates can go both up and down, and you have to manage against that. If you bought the line that Treasury Instruments are just the best thing in your portfolio, you've got to realize that if the government keeps spending like there is no limit, the money supply goes up, and eventually treasuries will have to start paying more interest. So gradually and then suddenly the paying-near-nothing treasuries in your inventory are essentially worthless, and everyone wants to take their money where the music is playing, and the sky is clear.
Bankers, especially in the FI world are supposed to know this can happen, and good ones balance their portfolios against it. What's the point of being a FI trader, unless you actually do trades - not just buy-and-hold. Anyway, so although the current administration/junta brought this on and should have been aware of the issues for the banking world, what with being the adults (HA HA HA) in the room, a lot of blame must go to the bankers who seemed to think the low-interest party would go on forevah. - Kansas says that 'nothing lasts forever but the earth and sky', but I have it on good authority that even those are only on long term loan.
>^..^<
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