Posted on 03/27/2023 9:22:54 AM PDT by SeekAndFind
Peter Schiff appeared on Real America with Dan Ball to talk about the bank bailout, the unfolding financial crisis, the Fed and inflation. He said this is a sequel to 2008 and like all sequels, it’s going to be worse.
Dan started the interview by referencing Sen. Elizabeth Warren’s assertion that the failure of Silicon Valley Bank and Signature Bank was caused by “deregulation.” Peter said this deregulation “exists in the fantasy of her mind,” and pointed out that banking is one of the most heavily regulated industries in the world.
It would be much safer if it was regulated by free market forces instead of government.”
The fact that the FDIC guarantees everybody’s deposits makes the system that much riskier.
Peter noted that we currently have record-high credit card debt.
It’s not a coincidence that both the borrowers and the lenders are broke. You know, the reason for that is the Fed. The Fed kept interest rates artificially low for more than a decade encouraging people to go deeper and deeper into debt and banks to extend them the credit. And now that they’re forced to raise interest rates, something that was always going to happen — they have created another financial crisis, which is something I’ve been warning about for years.”
Of course, the media doesn’t want to call it a financial crisis. Instead, they call it a “banking crisis.”
The financial crisis of 2008 was a banking crisis. Nobody wants to say what it is because they don’t want to invoke memories and comparisons to 2008. But this is a sequel to 2008. And like all sequels, this one is going to be worse.”
Peter explained that the 2008 financial crisis was due to the Fed holding interest rates artificially low at 1% from 2002 until late 2004. That gave rise to a proliferation of adjustable-rate mortgages, zero-doc loans, no money down, and all kind of other crazy lending schemes. This ultimately blew up the real estate bubble. Predictably, a lot of those loans went bad when the Fed started normalizing rates. (It eventually got rates to a peak of 5.25% in 2006. ) That precipitated the 2008 financial crisis.
The government and the Fed managed to cut the financial crisis short with zero percent interest rates and quantitative easing. Then it left rates at zero for more than a decade.
The Fed has made far more monetary mistakes since the 2008 financial crisis than prior. And so, it has inflated a much bigger credit bubble. Now the banks are in far worse shape than they were in 2008, especially the ‘too big to fail’ banks that we bailed out and are now much bigger than they were back then and even more insolvent. So, as a result of what the Fed has done after the 2008 financial crisis, this new financial crisis that just got started will be much worse. And my fear, which is already being validated by last week’s balance sheet, is that this crisis is going to be so bad that the Fed is going to pull out all of the stops and print as much money as possible to bail everybody out. Then the inflation that we saw in 2021 and 2022 is just the tip of a huge iceberg and we’re going to be looking at double-digit inflation rates as far as the eye can see.”
Peter also talked about the insolvency of the FDIC. It doesn’t even have enough money to cover deposits up to $250,000 as promised. Peter pointed out that during the Great Depression when there was no FDIC, people only lost about 2% of their deposits, even with all the bank failures.
The banking system was much sounder before we had an FDIC than it is now. Because back then, banks had an incentive to be responsible because their customers held them accountable. But now there is no accountability.”
Peter said the push to raise FDIC limits even higher is nothing but doubling down on a bad policy.
It’s just going to create a bigger moral hazard. But they’re trying to undo the damage from the moral hazard they created by bailing out some banks and leaving the impression that some might be vulnerable. Now they’ve created a run on solvent banks as people rush to put their money into insolvent banks.”
All of this raises a bigger question: where is the government going to get the money for this?
That’s just another unfunded liability that has to be piled on top of a massive unfunded debt on top of the funded debt that’s unpayable already. So, it’s all going to be inflated away. That’s what people have to worry about. Everybody’s bank account is at risk because inflation is going to destroy the purchasing power of your money. It doesn’t matter if your bank fails because the money that you deposited in the bank, that’s going to fail.”
Buy gold?
Not all sequels are crap e.g Empire Strikes Back, Road Warrior, Top Gun Maverick, Puss In Boots Last Wish.
But yeah, the banking thing is a dumpster fire in the making...
“But yeah, the banking thing is a dumpster fire in the making...”
On purpose.
Silver and gold folks.
Peter reminds me of the Godfather II quote:
“Hyman Roth has been dying from the same heart attack for the last twenty years.”
;-)
Hyman did eventually die—but it took a bullet to do the job.
BidenDepression 2023
So, who is Hyman Roth in this banking crisis?
It will be like a financial game of Whack a mole!
Every time they save a bank,another one fails...........
While Peter is correct. He has been saying this since 2011.
His solution is gold. Gold is good, but the price is controlled, and it is manipulated. Look at the price of gold for the last 10 years. It should be around 16k by most gold experts, and it’s currently just under 2k. Gold prices are controlled by the Fed the derivatives market.
There are also A.I. trade bots like Blackrock’s Aladdin that keeps gold and silver prices in check.
In 1933 gold was banned in the U.S. from 1933 until 1974. What would not stop them from doing this again?
Then you have transportation issues where it can be seized if taking it across borders.
You have security issues of keeping it outside the bank where they can seize it if you physically hold it.
Trading gold coins for everyday stuff is not easy, and having gold bars is not great because it has to be melted down to really use it unless someone buys your gold bar.
Obama just kicked the can further down the road
The central banksters periodically crash the system so that they can periodically purchase a Nation’s assets for pennies for pennies on the Dollar.
Hyman Roth is the financial system—Peter says it has been having the same heart attack for twenty years.
The value of gold, like the value of dollars, exists only in the imagination of counterparties.
Read that again and make sure you understand it, because it is true.
bmp
RE: Hyman Roth is the financial system—Peter says it has been having the same heart attack for twenty years.
OK let’s continue with the analogy, Hyman Roth died of a bullet, what is the bullet that will kill the Financial System?
The best things to come out of the 2008 financial collapse were the movies “Margin Call” and “The Big Short.” If you haven’t seen them, you should. I’m sure there will be even worse surprises this time around.
“..what is the bullet that will kill the Financial System?...”
pedoPIG
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