How accelerating bank deposit withdrawals could harm the economy, including real estate prices. How dollars slosh around the financial system but always seem to end up at the Federal Reserve. Topics covered include: How many deposits have left banks since the Silicon Valley Bank collapse How much have banks borrowed from the Federal Reserve to meet deposit withdrawals Why exiting deposits are harming bank profits and causing them to make fewer loans How the credit crunch … [Read more...]
425 Plus: Bank Contagion Update, Mid Cap Value ETFs, SEC Yields, and Deciding When to Retire
In Plus episode 425, we provide an update on the U.S. banking situation and the potential impact on financial markets and the economy. We look at mid-cap value investing and profile three mid-cap value ETFs. We also review a small-cap value with momentum ETF. We review what unsubsidized SEC yields are. Finally, we consider whether a member has enough to retire. … [Read more...]
424: Are More Bank Runs Coming? The Collapse of Silicon Valley Bank
What caused Silicon Valley Bank to collapse in only 44 hours, and how likely will the contagion spread leading to other bank failures? Topics covered include: How losses on bonds blew up SVB's balance sheet How is Silicon Valley Bank similar and different than other regional banks What the FDIC and Federal Reserve are trying do to restore confidence and stop bank runs How a weakening of the Frank-Dodd bank regulation act set the stage for SVB's failure Why bailing out … [Read more...]
410: Is Cryptocurrency Dead?
How the bankruptcy of FTX, the world's third-largest crypto exchange, undermines trust in cryptocurrency and decentralized finance, making it even more difficult for crypto to ever be taken seriously as a monetary alternative. Topics covered include: How FTX squandered its customers' deposits How FTX is another example of a private money bank run How traditional securities lending works and why it is very low risk compared to the highly speculative nature of cryptocurrency … [Read more...]
392: What Is Money and How to Use It
David and his son Camden hold a conversation about money, its attributes, how it's created, and how money differs from investments. Topics covered include: How our earliest money memories impact our views on money The difference between public and private money What are the two primary attributes of money Why money should be accepted with no questions asked How some countries use more cash than others How money differs from investing Why private money can be … [Read more...]
305: Are Banks Safe?
Is a bank collapse coming due to bank exposure to collateralized loan obligations as defaults increase? Topics covered include What are collateralized loan obligations (CLOs), how are they structured, and what has been their historical default rates. How much exposure do banks have to CLOs and will it impact your bank savings and investments. What are bank capital ratios and how are they calculated. How banks are more conservatively run due to the adoption of the Basel III … [Read more...]
285: Money is Debt
Money can be used to purchase things now or saved to purchase things later. If individuals want to save their money to purchase things in the not too distant future, they can invest in what are known as cash equivalents. These include savings accounts at banks or money market mutual funds. Cash equivalents pay a little bit of interest while also having price stability in that the value of deposits varies little from day-to-day. Money Is Debt Backed By Debt Gary Gorton, Professor of … [Read more...]
155: Clues To The Next Financial Crisis
How panic caused the great financial crisis and what to look for to see if it is happening again. Photo by Matthew Henry In this episode you’ll learn: What is commercial paper. What are shadow banks. How central banks stopped the 2008 financial panic. How financial indicators such as commercial paper-T-bill spreads, the Libor-OIS spread and the spread between credit default swaps and bond yields can help identify if the risk of financial panic is increasing. Show … [Read more...]
