“During times of universal deceit, telling the truth becomes a revolutionary act.” - George Orwell
Be careful everyone!
This Friday the FDIC’s Deposit Insurance Fund lost $0.8 billion due to the closing of 7 banks, and last Friday over a billion was lost due to 4 failed banks.
At the current rate, the DIF will be emptied in roughly September, and it is not 100% clear whether the US government will immediately switch on the spigot to the $100 billion emergency money created out of debt by the FED. As the FDIC “insures” over $13,000 billion in assets and there are still well over 200 problematic banks on the FDIC watch list with over $150 billion in assets, caution is warranted. For more details on our banking system, please read “Off a Cliff with No Air Bags.”
My note to you is that the FED can easily – but may not in practice, there is no way of knowing – control the rate of bank failures by injecting liquidity as necessary.
Speaking of our wonderful central planners, the New York FED announced on Friday that it was beginning an Investor Advisory Committee on Financial Markets (IACFM). (I am not kidding with the acronym.) Per the press release, the committee will serve as a forum for informal discussions on financial, economic and public policy issues. The IACFM is currently comprised of 13 prominent leaders in the investment community, and the FED claims it is solely an advisory group with no formal policymaking responsibilities.
The timing of this announcement is strange, particularly as this idea was not implement for the past 2 years, and the official government story is that the downturn is over and “green shoots” are sprouting, Check out the list closely – the happy-go-lucky bond trading company PIMCO, Soros, Credit Suisse, and – not exactly a private investor – the New Jersey Treasury Department’s Investing Division are all present.
If you ask me, this makes for scenes straight out of Atlas Shrugged, where the corrupt government officials and captains of industry hatched hare-brained ideas on how to “run the economy” in hazy, smoke-filled rooms.
Or perhaps it is more like a scene out of Animal Farm which is the subject of an awesome Jim Quinn article here.
Stay Free!
Jake
PS I wrote a brief review of a fantastic book called “Honest Money” here if any are interested. The book is highly recommend if you want a clear understanding of our country’s monetary history.
