The Banking Collapse is Forcing a Fed U-Turn | PREPARE.

well folks you can't make this stuff up

the Federal Reserve is literally back to

printing money that's right the days of

quantitative tightening are over the

days of the money printer being roaring

it on again are back and Bitcoin is a

roaring on the news and sound that the

money printer is going Burger again you

can't make this stuff up but I'm about

to tell you a lot of stuff that seems

like it's made up it's totally true

let's go ahead and start with this

straight

from the Federal Reserve this right here

shows you on the left side the increase

the rapid increase in the federal

reserve's balance sheet where we're

moving up from a low of about four and a

half trillion dollars

all the way up to

seven trillion dollars all the way up to

nine trillion dollars of the Federal

Reserves balance sheet in other words it

doubled through the pandemic thanks to

all the stimulus and money printing

remember the FED prints the money

digitally and then the treasury

Department physically prints it or sends

it out via stimulus checks or whatever

anyway those parts aside look at what's

happened over the last year since about

April of

2022 we've started to see the federal

reserve's balance sheet shrink and the

fed's been shrinking to the tune of

about 90 billion dollars per month they

started at about 45 slowly worked their

way up to 90. so that's how you could

see the slope of that curve actually

getting steeper to the downside Right

started off a little gradually and then

they accelerate it that is the

quantitative

tightening cycle where the FED is

basically vacuuming money out of the

economy so think about it like Luigi and

Luigi's Mansion sucking up coins out of

various different vases or vases or

couches and carpets or whatever taking

money out of the economy that's to be

contrasted with money printing where

you're basically you know helicopter

moneying or making it rain with money

right

take a look on the right side what just

happened we moved down to about 8.3

trillion dollars of a Federal Reserve

balance sheet and what just happened we

saw it pop right back up to

8.63 so about a 300 billion dollar

injection of liquidity into the economy

I kid you not but this is

pretty remarkable what I'm about to say

you literally have a bank run happening

right now where money is moving from

companies like Charles Schwab who just

lost 8.8 billion dollars in their money

market accounts because people are

fleeing uh Charles Schwab which was

pretty surprising uh and uh where did

they run well they ran over to the big

Banks the Bank of America Wells Fargo

Citigroup JPMorgan Chase people are

consolidating into the top four Banks

and uh people are also leaving Banks

like First Republic a smaller Regional

Bank and what are the big Banks doing in

response to about uh you know 30 billion

dollars having disappeared from First

Republic

or potentially more the big banks have

just turned around and taken about 30

billion dollars and injected it right

back into First Republic

you can't make this up Wells Fargo

Citigroup JP Morgan Goldman Sachs Morgan

Stanley and various others just got

together and said together we're going

to deposit 30 billion dollars at First

Republic which means if you were

literally running away from the small

Banks and putting it into the big Banks

the big banks are like let's just put

some of it back into small Banks

now that is not a typical capitalistic

move in my opinion that is driven by

politics and the treasury Department

probably on their knees begging the big

Banks to send some of the money back to

the small Banks now that's actually very

interesting but also concerning because

after all isn't that the job of the

Federal Reserve the Federal Reserve was

to open up their essentially uh by the

FED pivot loan facility to allow Banks

to go to essentially the discount window

and that's not actually what the program

is called but it's the same acronym

allow Banks to take their assets their

treasury bonds mortgage-backed

Securities and whatever and even though

they've lost value go to the Federal

Reserve and say hey fed can I have money

for this and they'll hand them basically

something that's worth maybe sixty

dollars but the FED goes and says well

eventually it'll be worth 100 we'll give

you a hundred bucks right so the fed's

supposed to provide liquidity to these

Banks but apparently that's not enough

apparently the treasury Department now

wants big Banks to send a signal to

markets that don't worry we believe in

the small Banks so much we're taking

money from our own coffers and putting

it into the small Banks

nobody believes that it's a big old

clown move it's a sign that things are

actually much worse than they initially

appear but then again that's no surprise

when individuals much like in 2008 March

of 2008 told us don't worry these are

just idiosyncratic risk which you kind

of can't say that without spelling the

first like four letters of idiot

but anyway idiosyncratic risks are a way

of saying oh this is that's just

isolated to One Bank yeah this is the

same thing they said in March of 2008 oh

it's just it's just isolated to uh bear

Stearns and then what happens AIG Lehman

Brothers complete disaster and cluster F

many banks going bankrupt now that's

actually part of a normal economic cycle

banks are supposed to go bankrupt if

they've had poor management practices

and the whole point of having an FDIC

Insurance limit of 250k is to protect

people who have less than that amount of

money but be a wake-up call to those who

have more than that amount of money in

deposits to actually scrutinize the

banks that they're in they're depositing

their money into as a tool for

preventing Banks from being YOLO risky

with people's money the whole point of

an FDIC Insurance limit is to send the

signal to banks that your depositors

will be evaluating you to see whether or

not they trust you enough to breach that

limit

of course then people are like oh you

can't require depositors to do that

they're too stupid to do that that's the

socialistic point of view bail everyone

out spread the pain oh the banks are

losing money or FDIC is losing money

well let's just raise the fees at all

other Banks when some of them lose money

let's raise the fees everywhere it's

corporate socialism it's corporate

welfare but what's actually happening

right now and uh where are some of the

numbers so what's interesting here is

the Federal Reserve has just lent out

about 300 billion dollars to cash strap

banks in just the last week the holding

companies that they set up for failed

Banks the FDIC set up two holding

companies uh has received about 143

billion dollars to pay their uninsured

depositors out that's sort of the

backstop of depositors right however

there were an additional 153 billion

dollars borrowed from the Federal

Reserve over this past week through the

discount window that's how you get that

QE think about it it's literally Banks

well maybe it's not literally but

imagine this okay a banker walking up to

a window at the Federal Reserve going

hey man I need cash and the facts like

here's your money bag

now the FED gets an IOU that IOU is an

asset assets go on a balance sheet so

the bankers walk away with cash the FED

gets an IOU that IOU shows up right here

on the federal reserve's balance sheet

now you might wonder but wait a minute

Kevin why does it work like that because

didn't they just give away a bunch of

cash

not really because they just created

that cash out of thin air that's why

it's called a money printer that's why

the fed's balance sheet increases so

even though they're receiving an asset

quote unquote worth a hundred dollars

for every 100 of cash they're giving out

they're actually receiving an asset for

giving away nothing they're giving up

funny money they're giving up magic all

the Federal Reserve does is change a

number in a spreadsheet to digitally

print money yes that is legal that is

how the system works it's remarkable but

what's really remarkable is that on a

typical week you tend to see four to

five billion dollars of money borrowed

through this discount window okay well

that totals to four times five about 20

billion dollars a month being borrowed

from the discount window right but wait

a minute the Federal Reserve is

quantitatively tightening to the tune of

90 billion dollars a month well that's

four and a half times as much as

actually being borrowed from the

discount window so what happens well the

balance sheet goes down unless of course

you have a crazy week like you just had

where people actually borrow

300 billion dollars

that's insane not only is that insane

but now JP Morgan is suggesting that the

Federal Reserve may actually be

injecting up to two

trillion dollars through the bank term

funding program that's the buy the

effing fed pivot acronym btfp Bank term

funding program that's the actual name

and JPMorgan thinks that the btfp is

actually not likely to just be a 125

billion dollar facility like they said

it was JPMorgan thinks it could be as

large as two trillion dollars now you

might ask yourself but wait a minute

Kevin if they said it's 125 billion

dollars why is JP Morgan saying it could

be two trillion dollars are we being

lied to

yes and no so the reason you're not

being lied to is because technically the

facility is set up for 125 billion

dollars

the way you're being lied to is via

omission

ordinarily when the Federal Reserve sets

up a facility like this they say look we

have a facility that has an

authorization of spending 125 billion

dollars now because we're the fed and we

can give ourselves as much leverage as

we want ordinarily we'll leverage that

facility 10x

which that's what they did during covid

which means 125 billion dollars is

really like 1.2 trillion dollars

but in their last letter that is the

letter the Federal Reserve established

the btfp program in the Federal Reserve

actually removed

any mention of how much they would

leverage the facility which on one hand

suggests oh maybe they're not going to

use any Leverage

no if they weren't going to use any

leverage they would have told you they

weren't going to use any leverage what

they did is actually removed mention of

Leverage on purpose to conceal the

actual likelihood that the problem

that's really happening is so great that

not only do you need to get life

insurance in as little as five minutes

link down below it's what Lauren and I

use it's actually really great it's easy

to use just go to Met kevin.com Life Met

kevin.com Life really easy to use not

not only is it so bad but the Federal

Reserve is basically hiding

how much they're leveraging uh this

facility to where JP Morgan believes

they're hiding of this facility implies

they might be leveraging this to the

tune of 18 to 20 x that is how JP Morgan

and their analyst note believes the FED

is actually

willing to inject about two trillion

dollars of liquidity into this disaster

now if you actually look at the chart

you can see if we're at 8.3 before the

injection of liquidity and about 8.9 or

you know about a year ago

well then that means if we add 2

trillion to 8.3 we'd actually run up to

about 10.3 trillion which means the

balance sheet at the FED would actually

expand by the tune of somewhere around

1.2 trillion dollars above all of the

quantitative tightening so in other

words

the money printers may be back on to a

much larger degree than anybody actually

realizes right now that's what JP Morgan

is saying so when you're hearing about

that two trillion dollars and you're

like wait I thought it was 125 billion

dollar facility this is how you're being

misled now it's unfortunate that the FED

is not transparent about that but then

again they probably have a reason for

that and the reason in all likelihood is

if people realized that the FED actually

had to come out with two trillion

dollars to save this banking crisis

people would lose their sh9t people

would freak out so damn badly that they

would literally go to every single

Regional Bank and say why do I have my

money here why don't I just consolidate

my money at the big Banks which quite

frankly that is to some degree a form of

capitalism why work with the small

business when you could get a cheaper

deal at Amazon now that is terrible for

small businesses and that leads to a lot

of job loss and call a consolidation and

ultimately leads to the Big D word no

not yes there's a coupon code linked

down below that expires next week and

then the price goes up for the amazing

programs in building your wealth no the

d word is deflation when you have

consolidation amongst larger companies

who could be much more efficient via

economies of scale you tend to have

deflation now unfortunately with that

can come the loss of smaller business uh

flexibility

for example in a New York Times article

published yesterday the collapse of

Silicon Valley Bank has put a large

strain on a lot of tech startups who are

now facing significant increased

scrutiny not only from investors who are

like why the hell did you have so much

money at risk with this smaller bank but

also lenders are like

yeah you know Silicon Valley Bank

collapsed we don't know that we want to

actually lend you because you're a risky

startup and so now you have this

potentially other info disinflationary

impetus of startups not having as much

access to Capital anymore it's not just

that Silicon Valley Bank collapsed but

that means that all of the credit lines

that they were giving willy-nilly to

startups don't exist anymore now the

debt is still owed by the people who

borrowed it's not like that disappears

but you can't borrow any more money now

you got to go to a different bank and

borrow money for your startup well where

are you going to do that if you go walk

into a jpn or a Bank of America or

whatever you're like hey man I'm a money

losing startup can I borrow 10 million

dollars they're going to laugh you out

of the office

because they actually have risk

procedures that say we can't do this

right now some people are like what do

you mean risk procedures like don't the

shareholders want risk procedures

because you know they don't want to lose

money and go bankrupt no shareholders

don't care I mean ultimately

shareholders care when things go bad but

generally shareholders in aggregate okay

this is no offense to any individual

shareholders it's just an aggregate the

only thing shareholders want is stunk go

up they don't care uh they will be

completely blinded by risk mitigation so

so to suggest that oh well shareholders

will somehow self-regulate a company is

like complete but anyway so the

Federal Reserve on top of this by the

way uh is now paying out so much money

uh in bonds uh that they are in repo

facilities or whatever that they're

holding they're actually now losing more

money than they're making uh this is

called the remittances facility or or

process where generally when the Federal

Reserve has excess money they will uh

distribute that money back to the

treasury Department that's generally

what happens fed has more money they

distribute it to the treasury Department

however

that does not happen when the Federal

Reserve has more expenses and you could

see that via this chart right here the

Federal Reserve is actually

substantially negative which means

they're actually needing to borrow money

or print it from the treasury Department

so they're either taking money from the

treasury Department or they're just

printing more uh given that we're

knocking on the door of the debt ceiling

they're probably just printing more and

that's why you see the quantitative

tightening cycle essentially come to a

screeching halt now many people say hey

wait a minute isn't this consistent with

a Fed u-turn

and in many ways it is see the Federal

Reserve tends to panic once they break

something and then they start injecting

money and they turn the money printers

on they did that in 1987 and marked the

bottom of the market they did that in

March of 2003 and marked the bottom of

the market they did that in February of

2009 and marked the bottom of the market

they did that in December of 2018 and

marked the bottom of the market they did

that in March of 2020 uh during covid

and that marked the bottom of the market

now that is not to be confused with a

rate cut style pivot okay rate cut pivot

very different I've talked about that a

million times before just type into

YouTube meet Kevin pivot I really don't

want to go over that again uh because

that's that's different from from the

FED turning all the money printer on

turning it on heavily again

traditionally

fed turning the money printer on again

and historically is a very good thing

for the equities market and I think

that's why stocks are actually somewhat

happy over the last few days here

however

there's always the risk and these words

are obviously very dangerous there's

always the risk that this time is

different we never know when what was

historically true ends up no longer

being true we just don't know the

reality is every recession is different

they just tend to rhyme right and

generally when the money printer turns

on there's a great sign to buy generally

and historically again not to be

confused with a rate cut or

quote-unquote pivot

so what else do we know well the other

thing that we know is obviously the

Federal Reserve now suggests they're

going to provide a review of Silicon

Valley Bank by May 1st Biden says he's

going to call on Congress to pass more

regulation it's probably not going to

happen but more importantly what are

investors now saying about this Panic

well I think it's worth looking at what

Bill Ackman has to say this is a an

interesting thread and I think we can

add some details to this so let's go

ahead and add some details so Bill

Ackman says secretary Yellen has

apparently pushed the systemically

important Banks to recycle some of the

deposits they received from First

Republic Bank back into First Republic

Bank for 120 days the result is that

First Republic Bank default risk has now

been spread to our largest banks now I

actually disagree with that I think the

treasury Department and the FED realize

that they will print as much money is

absolutely necessary to make sure the

systemically important Banks survive I I

if if that doesn't happen in the one

percent Edge case scenario that that the

big Banks actually fail without a

bailout we have bigger problems it

probably means there's like nuclear war

or something like that uh and and don't

get me wrong I'm not saying I'm not

advocating for this giant Ponzi of the

American dollar that we have the reality

is at some point in the future the

dollar will be absolutely worthless and

all currency will collapse because

that's also what history has told us no

single currency has ever survived

becoming worthless not a single one so

it will happen I don't think it's going

to happen this cycle

so I think we're going to be able to

essentially still print our way out of

this one but anyway this so so this idea

of default risk being spread to the

largest bank to some degree he's he's

right it's just the backstop is so large

that I don't think that's actually so

terrible uh the point of this these

deposits going from the larger Banks to

the smaller is just a tool to try to

trick average Americans who are like so

does this mean I shouldn't withdraw my

money from from uh First Republic Bank

let me be very clear

you should not be at a small Bank above

and beyond the FDIC Insurance limits and

even if you're within those limits would

be a headache potentially to access your

Capital if you had to wait to go through

the receivership processes even though

technically everybody was supposed to

access their capital on Monday there are

already reports and rumors on Twitter uh

that a lot of people who have banks at

Silicon Valley Bank cannot access their

capital

I personally would not have a large

portion of my money at a bank that is

not too big to fail too big to fail as a

bank with over 250 billion dollars in

assets under management the top eight

banks are the banks that go undergo the

largest fed stress tests and therefore

basically get the fed's blessing because

the fed's basically like hey follow our

rules we'll always bail you out nudge

nudge wink wink

it's my take now some people are like oh

Kevin are you advocating for a bank

Grant no obviously I don't want the

financial system to collapse but I am

advocating for being smart with your

money and if there's a non-zero chance

that you lose some of your money at a

smaller institution why would you take

the risk

anyway going back to Bill Ackman

spreading the risk of financial

contagion to achieve a false sense of

confidence he's right this is trying to

create a false sense of confidence he's

absolutely right about that it's trying

to manipulate people into thinking well

everything must be good then oh

a systemically important Banks would

have never made this low return

investment in deposits unless they were

pressured to do so yeah I agree with

them the market has responded to this

fictional vote of confidence with a 35

aftermarket decline in First Republic

Bank stock First Republic Bank is no

Silicon Valley Bank it's well managed

well capitalized blah blah blah it's

caught up in a bank run due to no fault

of its own it does not deserve to fail

yeah I mean that might be true

we need a temporary system-wide deposit

guarantee immediately until expanded and

modernized FDIC Insurance systems are

made widely available

you know Bill Ackman has has a way of

sort of pounding the table with things

that we really need and and I think it

could be argued that maybe some level of

banking consolidation is actually normal

and healthy now that's not to say we

only want four Banks an oligopoly of

banks but it is to suggest that maybe we

we don't need ten thousand Banks or five

thousand banks in America maybe we only

need a hundred

there's still plenty of competition that

way

maybe you only need 50. do you need five

thousand I don't think so but anyway the

press release announcing the 30 billion

dollars of deposits raised more

questions than it answers lack of

transparency caused Market participants

to assume the worst true I said before

that hours matter we have allowed days

to go by half measures don't work when

there is a crisis of confidence again I

have no Investments long or short in the

banking sector dude nobody believes this

guy yeah that's mostly because people

got very jaded during covet and hey

maybe maybe he's he's right I mean I

don't think he's blatantly lying because

I would just expose him to Too Much

liability maybe he has no Investments

long or short but maybe maybe some of

the companies is associated with do

right I I don't know I'm not trying to

be jaded to the point where I'm

suggesting you know I don't trust

everything Bill Ackman says but let me

just be clear I don't trust anything any

anybody says uh anyway so I'm simply

extremely concerned about the financial

contagion risk spiraling out of control

and causing a severe and causing severe

economic damage and hardship we need to

stop this now we are beyond the point

where the banks can solve the problem

and we are hand in the hands of the

government and Regulators yikes well

that does not sound very exciting

unfortunately but the good news is you

can still get 12 free Stocks by going to

metcaven.com free and signing up for

Weeble or life insurance in as little as

five minutes at kevin.com life or the

programs on building your wealth link

down below or met kevin.com join my

opinion on some form of a conclusion to

all of this is

well a minimize your risk at small Banks

B

make as much money as you can by making

it you know realizing that in a

recession it's time to double or triple

down work as hard as possible and make

as much extra money as possible because

you just can't guarantee that the

revenue sources you previously have had

will be there for you going forward much

longer so you have to be very very

careful and astute in making as much

money as you possibly can right now

in addition to that I think it's a great

time to start considering uh looking at

the stock market as a potential

opportunity in the event this is a Fed

u-turn

C I think it's a I don't know what

letter I'm on anymore anyway I think

there's a good opportunity to look into

real estate Investments soon

probably within the next one to two

quarters here and ultimately do I think

that we're facing a larger economic

contagion of bank failure for smaller

Banks yes I do

for larger Banks top probably 50

unlikely top eight absolutely not no I

realize Silicon Valley Bank was a top 16

bank so don't get me wrong there could

be more collapses in the top 50 but

that's why I like the shelter so to

speak of the top eight it's like if if a

nuclear bomb was flying our way whose

bomb shelter would you rather go in you

know think about it like uh uh what's

the the girl with the with the wolf do

you want to go in The Twig house the

wood house or the brick house right

which one's going to blow over uh or

which one's gonna have the most damage

in in the case of economic Fallout to

stick with that example well I would

venture to say the ones that are going

to be most insulated are the big ones

they get the thickest walls so

I I don't think this disaster is as

terrible as it seems I do not think this

is the time the dollar collapses I do

think all of this is incredibly

disinflationary potentially even

deflationary uh I I think the artificial

intelligence Revolution that we see over

the next

we're expect to see over the next 10

years here will be absolutely remarkable

uh now uh I you know Kathy Wood has sort

of chimed in on this as well she argues

that hey well if we had transparent

cryptography you know basically

cryptocurrency uh that uh you know was

essentially not founded with funny money

we could potentially avoid this kind of

craziness

uh that would probably be quite

disinflationary since you wouldn't have

the inflationary money printer but uh

you know she makes a good point the

debacle would not have been possible in

a decentralized transparent Audible and

over collateralized crypto asset

ecosystem now I personally take issue

with this word right here while in

spirit she is correct it's important to

remember that many brokerages dare I say

like

Finance

say they're over collateralized say they

might have a billion dollars to back uh

the busd let's just say as a quick

example you know let's say busd has 900

million dollars in demands but they have

a billion dollars in cash that solely is

over collateralized but then if they use

that same billion dollars to say 10

other coins with 900 million dollars or

over collateralized then that means in

aggregate they're actually

10x under collateralized they just sort

of misled you into thinking they

individually were overclocked so that

word when you hear over collateralized

red flag should go up

but but in the true Spirit of the phrase

over collateralized sheet she is right

that to some degree a crypto is a

solution to Central points of failure

and the opacity of of uh markets that we

see today she's not wrong about that so

I think that's actually a a well put

point but again I don't think this cycle

is the cycle where we have a severe

contagion risks though I do think a lot

of banks are at risk now it is

interesting to see Bitcoin up about 6.7

percent in my opinion Bitcoin is

responding directly to the money printer

being on again this is what happened

during covet money printer Goldberg

guess what goes up stocks and Bitcoin so

those are my thoughts and my conclusions

on the banking crisis though apparently

now Elizabeth Warren has asked if the

Silicon Valley Bank and Signature Bank

Executives would return the bonuses and

salaries they earned in the last five

years before their Banks collapsed

you know Elizabeth Warren

says stuff to you know essentially

create a very populist uproar and and

she's not wrong about asking the

question but I always think it's

interesting like I wonder what it must

be like to sit there and think what

could I say that 99 of people are gonna

love and then that's all you do is you

sit there all day long thinking up ideas

of what 99 of people are going to love

that's and I'm not saying to some degree

there won't be clawbacks because I think

there should be a lot of salaries and

bonuses were paid right before banking

collapses stocks were sold right before

the banking collapses does that mean it

should go all the way back to employees

five years ago

probably not

but the extremeness is always something

that uh gets attention and I think

that's what politicians like because it

keeps them in office so in other words

the nature of politics encourages

extremeness

[Music]

but that's not necessarily actually good

for our

our our economy somebody here in the

comments writes woke a hauntus

Steve writes do you think with these

small bank failures there will be more

or less investment to expand

productivity increase goods and services

Slash new technology if less it means

lower economic growth

yeah so it actually does mean less

unfortunately when smaller Banks fail it

means looser lending goes away and you

end up with net net tighter lending so

yes it does mean a slower economic

growth and a greater likelihood of

recession and as if On Cue Steve replies

and says I like lithium

[Laughter]

uh but but yes yes uh so this this this

is very very clearly uh a result is that

yes economic output will slow with less

lending and I think this is why it's so

important to focus on PP pricing power

style stocks

that uh that are likely to receive

investment uh and purchases at cash flow

regardless of a marginally weaker

economy and when I say marginally it's

not to minimize it's to say on the

margins right marginal analysis is

looking at the margins if the economy

slows for the bottom 50 percent yes that

in aggregate lowers GDP but it affects

the bottom 50 more than it does

the pricing power stocks that sell stuff

goods and services to the top 50 right

now obviously none of this is exact and

designed to be a science

but that is a thesis that I have and we

shall see how it evolves