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They actually did it. The Federal Reserve just raised interest rates by another 25 basis points right in the middle of a major banking crisis. I honestly do not understand what Fed officials are thinking. They had already blown a 620 billion dollar black hole in the balance sheets of U.S. banks by raising rates so aggressively, and that resulted in the second and third largest bank failures in U.S. history earlier this month. Apparently they are not yet satisfied with the carnage that they have caused, and so they have decided to make things even worse. What we are witnessing is either extreme incompetence of epic proportions, or they are trying to crash the economy on purpose. I am sitting here trying to think of a third alternative, but so far I am coming up blank.
Fed officials can see exactly what their reckless rate hikes are doing to the system, but they are pressing forward anyway. Wednesday’s rate hike was “the ninth consecutive rate increase”…
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter of a point, forging ahead with its fight against stubborn inflation despite a spate of bank failures and a growing crisis within the financial sector.
The unanimous decision puts the key benchmark federal funds rate at a range of 4.75% to 5%, the highest since 2007, from near zero just one year ago. It marks the ninth consecutive rate increase aimed at combating high inflation.
The fact that it was a “unanimous decision” should greatly alarm all of us.
Isn’t there a single voice of reason left at the Fed?
The last time the Fed raised rates like this was just before the financial crisis of 2008.
And we all remember what that did to our banking system.
But the Fed insists that this time is different. In fact, we were just told that our banking system “is sound and resilient”…
“The U.S. banking system is sound and resilient,” the Fed said. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.”
Of course banks don’t tighten the flow of credit when things are good.
They tighten the flow of credit when they get into trouble.
And it appears that another major U.S. bank is now exhibiting signs of distress…
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Shares of regional bank PacWest Bancorp dropped Wednesday after the company disclosed it had shed more than $6 billion in deposits during the recent squeeze on midsized banks, though PacWest said it did not plan to raise more capital.
The bank said in a press release Wednesday that it had $27.1 billion in deposits as of March 20, which is down from $33.9 billion at the end of December and from $33.2 billion on March 9. The change appears to have largely come from venture banking deposits, which accounted for a third of PacWest’s deposits at the end of December and now stand at just 24%.
There are more than 4,000 banks in the United States today, and hundreds of them could end up failing before this crisis is over.
That would mean fewer mortgages for potential homeowners.
That would also mean fewer auto loans, credit cards and debit cards.
Unfortunately, the flow of credit is the lifeblood of our economy, and so we need our banks to be healthy.
But if the Federal Reserve continues to go down this road, bank after bank will be absolutely crushed.
Needless to say, the Fed’s insane policies are also bursting the housing bubble. At this point, U.S. home prices are down 12.3 percent just since last June…
The national median existing-home price fell 0.2% in February from a year earlier to $363,000, the first year-over-year decline since February 2012, the National Association of Realtors said Tuesday. Median prices are down 12.3% from their record $413,800 in June.
U.S. homeowners have already lost trillions of dollars of home equity, and now the Fed has just poured more fuel on the fire.
It is madness.
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It is literally insane for the Federal Reserve to aggressively hike rates as we are plunging into a major economic downturn, but that is precisely what they are doing.
Look, if the long-term economic outlook was positive do you think that Walmart would be closing even more stores?…
Walmart has announced plans to close stores in Hawaii and Minnesota, which join a handful of other stores closing in several states this year.
The retail giant said the decision was made after a review process that determined the impacted stores failed to meet financial expectations, the company told USA TODAY.
Ten stores in Florida, Hawaii, Illinois, Minnesota, New Mexico, Oregon, Washington D.C., and Wisconsin will close by the end of the year, along with two experimental “pickup” locations in Illinois and Arkansas.
Walmart exists to make money.
If there was a chance that those stores could be turned around, Walmart would not be permanently shutting them down.
Sadly, other major retailers are also closing locations all over the nation.
They can see what is coming.
Higher interest rates are already crushing economic activity from coast to coast, and they are battening down the hatches.
The “experts” at the Fed are assuring all of us that they know exactly what they are doing, but the truth is that they have lost control.
As you read this article, wealthy individuals and large companies are pulling uninsured money out of small and mid-size banks all over America.
Many of those small and mid-size banks will soon be in very serious jeopardy, and that will significantly reduce the flow of credit into our economy.
Is this what they want?
Do they really want to see the U.S. economy implode?
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Our leaders continue to make mind-numbingly bad decisions, and we are on a course that leads to national suicide.
When will the American people finally wake up?
Sadly, most Americans are still blindly trusting the “experts”, and the “experts” have us on a highway to extreme misery.
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Article cross-posted from The Economic Collapse Blog.
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When is COMMON SENSE going to rear its beautiful head? Of course they are trying to CRASH the economy. The ignorance of the ‘Great Reset’ demands it. Why we the people sit around and watch and wait for these tyrannical Billionaires and Bureaucrats is beyond comprehension.
Arrest all the subversive idiots now. We can straighten it out after the dust settles.
Yes they are Wake up people
You’re saying this like it’s a bad thing.
Arrogance is the name of the game. If they had left rates alone or god forbid lowered them by .25 would have been tantamount to admitting their policies gave failed and caused the banking crisis and they will never admit that.
Is the Pope Catholic?
Wait? What?
Never mind.
Since the government has no more money, the Treasury is just printing up worthless paper and mixing it in with the money in your pocket which is decreases its value. The vast majority of price increases are actually an adjustment to make up for the reduction in value of money (inflation). Since money is such high demand to pay for Congress’s trillion dollar give aways, the Fed is raising rates to respond to the increased demand for money. Current bank failures are due to banks run by incompetent executives who have made bad loan decisions which become problematic when interest rates rise. If large banks get in trouble, Dodd Frank will allow them to seize customer deposits to bail themselves out (bail in). The rich get richer, and the peasants will become more numerous as the middle is squeezed out.
Of course they’re trying to crash our country, AND they’re trying to kill every American alive with their poisonous vaccines. I’m sure there’s a trip that will kill you, but not enough people took it so they’re holding off. Interesting, I saw the video from a club who put in their own 5g cell spot. When they turned it on? 100 people dropped dead. I’ll bet you didn’t see that on the MSM. But so what, they’re dropping like flies as well.
We are at the end of an economic system. If you have been paying attention since 2008 (when the system really died) They have inexplicably left rates near zero when the booming economy could have afforded some increases so yes, the Fed doesn’t know what they are doing in terms of helping you and me. Regarding the pressure it puts on small and medium size banks, THAT IS THEIR PLAN! Wake up. Wal Mart and Target and Home Depot (Huge multinationals) all thrived during the plandemic and forced out small business owners into bankruptcy. Do you not think that doing the same thing to the smaller banks in the banking system is not their goal? They hate us and want total control because after the little guys are out of business – Ta Da – The Fed to the rescue with a Central Bank Digital Currency (CBDC) to destroy every aspect of your free will and freedom to choose (AKA world wide communism controlled by them). They will decide for you, piss ant. Avoid CBDC at all costs. This is the hill to die on. No to CBDC.
Folks, the FED’s stated goal is to cause a recession. It’s not some clandestine plot behind closed doors. See, a recession is deemed the best way to stop inflation, unless, that is, of course, the US Treasury continues to issue trillions more in debt, and the FED also keeps pumping trillions into failing banks. That would (and probably will) result in “stagflation,” but that’s a whole other disaster that may or may not occur. Assuming, though, that high interest rates succeed in “crashing the economy,” then inflation should disappear forthwith. And why is high inflation worse than a recession? Because a recession is like a slow leak in your tire. It sucks, but you can pop on the donut and look all ghetto for a while till you have time to fix it. Rising inflation, though, if unchecked, tends to cascade into hyperinflation. This would be more like your tire being attached to a Tesla, and it exploded when the Tesla burst into flames because it was sloppily manufactured (probably by slaves in Elon’s favorite country, China), which was inevitable after losing billions in US subsidies. Yeah, hyperinflation is just like that: like stupid, treehugging carbon-crediting electric cars: it’s a society killer. So the FED is doing its job–stopgapping rising inflation to protect the USA from becoming another Venezuela. One can argue, and I would agree, that we don’t need centralized economy manipulators. But before the FED (and a lot of other financial regulation), America was run wholly by robber barons, and the money supply was in the hands of fewer people. There needs to be a happy medium, yes, but America hasn’t figured out what that is. For now, it’s the FED, and our economy can’t just go cold turkey.
Everything DemonRats touch turns into instant crap. They are all a bunch of evil, nitwits. Look at Raskin. Look at this Yellen woman. Look at Powell, Garland, Harris, Buttplug, Granholm, Biden. Dr.Jill. Good Grief, what a bunch of unmitigated @$$clowns. They will go down in history as the most horrible thing that has ever happened to America. I hope they are all cast into the Lake of Eternal Fire and damnation for what they have done to our once great nation.
What was your first clue –
The supply chain breakdown?
The destruction of over 100 food processing and distribution plants?
Food shortages?
Double-digit inflation?
Firing millions of unvaccinated people?
Skyrocketing gasoline and utility prices?
150 billion to a Ukrainian psycho con artist?
Constantly printing money?
Tax hikes?