Too much Fed liquidity has led to a whack-a-mole world of problems

Financial Times/John Hussman/4-25-2023

Cartoon courtesy of MichaelPRamirez.com

“SVB did not have adequate liquidity to tolerate a bank run and did not have adequate solvency to meet its liabilities. Emphatically, however, the failure did not occur because there was too little liquidity in the banking system as a whole. It occurred because there was too much.”

USAGOLD note: In essence, the Fed injected massive liquidity into the banking system that pushed aggregate deposits almost double FDIC limits. The bank managers bought what they thought to be safe U.S. Treasuries. Then the wheels fell off……

Related: Silicon Valley Bank: the multiple warnings that were missed/Financial Times/4-25-2023