Very Disturbing Credit Card Data

          Previously, I have written about increasing debt levels in the country among those in the private sector.  In short, private sector debt levels have been increasing; specifically, credit card debt has been rising very quickly.

          Rapidly increasing levels of credit card debt had me concluding that Americans were increasingly dealing with rapidly rising consumer prices by resorting to accumulating debt on their credit cards.

          Now, at least according to one recent survey, that is exactly what has been happening.  This from “Zero Hedge” citing a “Bloomberg” article (Source:

A large swath of American consumers are facing financial hardship as they grapple with elevated living costs, record-high credit card use, and two years of negative real wage growth. This perfect storm could decimate financially fragile households in the next downturn. 

As many as 89.1 million American adults (or about 38.5%) were found to experience some form of difficulty in covering expenses between April 26 and May 8, according to Bloomberg, citing new data from the Household Pulse Survey. This is up from 34.4% in 2022 and 26.7% during the same period in 2021. 

The rising trend is alarming but not surprising. Consumers have been battered by two years of negative real wage growth.

As wages fail to outpace the cost of living, many consumers have burned through savings and resorted to credit cards. The latest revolving credit data shows consumers appear to be ‘strong,’ but that’s only because they use their plastic cards more than ever to survive

Compared with the same period last year, the survey found 2.7 million more households were relying on credit cards to cover expenses. 

Consumers have record card debt and ultra-low savings rates and are paying some of the highest borrowing costs in a generation (the average interest rate on cards now exceeds 20%). This debt is becoming insurmountable for some as delinquencies rise

And what we have now is new debit and credit card data published by the Bank of America Institute that shows not just spending slowdown for lower-income consumers, but also the upper-income cohort is finally starting to crack

          Increasing delinquencies on credit card debt and auto debt are now the new normal.  (See “Bloomberg”

          As reported here last week, the Fed may now be poised to reverse course at some point in the near future and once again engage in easy money policies in an attempt to prop up the economy.  When the Fed first began tightening, this was my forecast, and I fully expect that this will be the case and perhaps sooner than many expect.

Of course, this will feed inflation and only make the eventual debt fallout worse.

          If you are not yet using the Revenue Sourcing planning method that incorporates strategies for surviving an inflationary followed by a deflationary period, I would strongly encourage you to consider it.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

Is the Fed About to Reverse Course?

The Fed, the central bank of the United States, after increasing interest rates by .25% after its last meeting, issued a statement that was a bit different than other recent statements after the Fed decided to increase interest rates.

          Here is a comment by Fed Chair Jerome Powell pointing out the differences between the Fed’s latest statement and prior statements:

“That’s a meaningful change, that we’re no longer saying that we ‘anticipate’” additional increases.”

          So, does this signal the Fed is finished with increasing interest rates?  Perhaps.

          And does this mean the Fed is about to reverse the pattern of rate increases even though inflation is not contained? 

          I wouldn’t be surprised.  If you’ve been a long-term reader of “Portfolio Watch,” you know that when the Fed embarked on this path of increasing interest rates, I suggested that it would be short-lived.

          Seems that, based on Mr. Powell’s last statement, that may now be the case.  We’ll have to wait to see for sure.

          David Stockman, former budget director, wrote an interesting piece that offered a terrific perspective and great insight as to the bind the Fed now finds itself in.  Here is an excerpt from the piece (Source:

In any event, the evident problem is that the Fed has backed itself into one hellacious corner. They are so addicted to interest rate pegging and manipulation that they cannot even see the absurdity of what they are actually doing.

To wit, since the turn of the century, they have so thoroughly flooded the financial system with excess liquidity and cheap credit that they can no longer even peg their traditional instrument—the Fed funds rate.

That’s why they have set up what is called the O/N RRP facility in the trade. It stands for overnight reverse repo facility, and when you strip away all the Fed-speak, it amounts to a giant borrowing window operated by the FOMC’s technicians at Liberty Street.

Presently, day in and day out, they are “borrowing” $2.3 trillion for the account of a central bank that can print money at will; and, in fact, has expanded its balance sheet from $500 billion to a recent peak of $9 trillion during the last two decades.

Nevertheless, as recently as March 2021, these overnight borrowings at the Fed’s O/N RRP facility totaled only $1 billion (purple line). So there has been a 2,200X expansion of the facility during the last 24 months.

Say what?!

It’s actually very simple. The Fed needed to pretend that it was raising interest rates in a financial system flooded with rate-depressing excess liquidity.  So it used the O/N RRP to set a floor under money market rates by sopping up massive amounts of excess liquidity, and then systematically raised the rate it pays overnight lenders from 5 basis points as recently as March 2022 to 480 basis points at present.

So where does all the money come from that was definitely uninterested in lending to the Fed at 5 basis points but more than eager at a rate 96 times higher?

Why, it’s the money market funds, which are now laughing all the way to the bank, so to speak. And to continue with that metaphor, in fact, where does all the surging inflows to the money market funds come from?

Why, the regulated commercial banking system, and most especially the regional banks!

In a word, the Fed is so tangled up in the underwear of its own monetary mechanics that it is actually causing the regional banking system collapse, which, in turn, may soon become the excuse to stop rate normalization and initiate the same rate-cutting disaster all over again.

So, yes, now is no time to stop. What is really needed is an end to Keynesian central banking and the abolition of monetary central planning.

          Notice from the chart republished from Mr. Stockman’s article that the Overnight Reverse Repo Facility is presently ‘loaning’ more than $2 trillion.

          The Federal Reserve’s policies of cheap and easy credit over the last 20 years have pumped up nearly all asset prices to unsustainable levels. 

          Now, as interest rates are rising, bank deposits with little or no yield are moving from banks to other, more attractive vehicles with a higher yield.  Stockman comments in his article (emphasis added):

To be sure, there is no mystery as to why these thundering bank runs are now underway. The Fed caused these banks to be flooded with absurdly cheap deposits, which, in turn, were pumped into higher-yielding long-term debt securities (blue area), commercial real estate (red area), and business loans (black area).

The problem, of course, is that the cheap deposits are now fleeing with alacrity, while small bank loans and securities books are increasingly underwater. Sharply rising interest rates and an economy visibly sliding into recession will do that!

Stated differently, these deposits never had a chance of being permanent at 25 basis points or less. Likewise, there was nothing sound about asset books which grew by 10% per annum between 2014 and the present in the three above-mentioned categories.

After all, during the same eight-year period, nominal GDP grew by only 3.2% per annum. Needless to say, true underlying demand for money at honest market rates did not grow at anything close to 3X GDP, meaning that these loans were not underwritten based on anything that even remotely resembled normal interest rates and a sustainable main street economy.

            Now, it seems the Fed may be pausing interest rate increases.  The question is, can they prevent a severe recession?

          I’m very doubtful.

          Are you ready?

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

More on De-Dollarization

          On these pages each week, I often comment on Federal Reserve policy and the effect that it will have on the economy and the markets.

          The current tightening policy of the Fed, required as a result of the prior easy money policies of the Fed in order to contain inflation, is now the primary culprit of the accelerating de-dollarization movement that is taking place globally.

          Aggressive US sanctions against some countries globally are simply adding gas to the de-dollarization fire as countries look to establish a permanent alternative to the US Dollar.

          While the all-important question relating to de-dollarization remains when the proverbial tipping point is reached, it’s fair to say that day is approaching much more quickly than we could have imagined just a few short years ago.

          This from Brazilian journalist, Pepe Escobar (Source:

De-dollarization is heading for a breakthrough due to rising global discontent with US ‘casino capitalism’, Pepe Escobar, geopolitical analyst, and veteran journalist, told Sputnik News.

“It’s a gigantic snowball all over the world. We cannot even keep up with it,” Pepe Escobar said in an interview with the New Rules podcast. “It’s very important what is going to be discussed at the BRICS summit in South Africa. This will probably be the crossroads moment where things are going to then go.”

Escobar explained that a growing number of countries in the Global South were doing the math and concluding that the US dollar was not a safe bet. The combination of aggressive US sanctions policy and reckless government spending has dramatically reduced the greenback’s international appeal.

“If you want to analyze the patterns these past two decades, you need to understand the fact that, if you are rich in commodities and if you are a productive capitalist nation and you decide to issue a currency, it will be internationally respected because people will know it’s based on facts, actual provenance, actual wealth,” he said. “That’s contrary to the system that we have now, which I have been calling it ‘casino capitalism’ for years. It’s futures, it’s bets, it’s suppositions. It may go right or wrong. If you lose, you lose it all. The house mostly always wins because the house is the one who prints the currency. It’s backed by nothing, literally, by a country that owes $30 trillion [in national debt] now and it will never be able to repay it.” 

To make matters even worse, the US Federal Reserve’s aggressive interest rate hikes have made borrowing in dollars expensive for almost everyone in the world. Prior to the Fed’s move, Kristalina Georgieva, managing director of the International Monetary Fund, warned in January 2022 that the US raising interest rates could backfire on the global economy and especially on countries with higher levels of dollar-denominated debt.

The ongoing US banking crisis threatens to further destabilize international financial markets. No country in the world wants to “catch a cold” when the US economy “sneezes,” as memories of the 2008 financial crisis linger.

“They say, ‘look, why do we have to be subjected to this kind of arrangement?’ And of course, before, as we all know, it was ‘the Empire of bases’, over 800 military bases all over the world, ‘the power of the financial markets’, ‘the power of soft culture’, ‘the power of cancel culture’, but the Global South is not intimidated anymore. I think this is the first [time] in this new millennium. We never had this before in the past two and a half centuries, at least,” Escobar said.

In January 2023, BRICS – an acronym for Brazil, Russia, India, China, and South Africa – made a splash by announcing that it may soon explore the possibility of creating its own currency to by-pass the US dollar. The idea was articulated on both sides of the Atlantic: Russian Foreign Minister Sergey Lavrov touched upon the plan during a presser after his meeting with Angolan President Joao Lourenco on January 25.

On the other side of the pond, President of Brazil Luiz Inacio Lula da Silva discussed the issue of the creation of a common currency for BRICS and the countries of Mercosur, a South American trade bloc, during his meeting with his Argentine counterpart Alberto Fernandez.

“Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries?  Who decided that the dollar was the (trade) currency after the end of the gold parity?” Lula said during an April visit to the Shanghai-based New Development Bank.

According to Escobar, the formation and development of three organizations, namely BRICS, the Shanghai Cooperation Organization (SCO) and the Eurasian Economic Union predetermined the end of the greenback-centered world order. BRICS members are now discussing designing an alternative currency; similar discussions are being held in the Eurasian Economic Union; they should start coordinating and then this will spill over to the SCO, the writer projected.

The trend has already been engulfing other blocs, Escobar continued, referring to the Association of Southeast Asian Nations (ASEAN). On March 28, ASEAN finance ministers and central bank governors held a meeting in Indonesia to discuss how to move to settlements in local currencies by further enhancing an ASEAN cross-border digital payment system.

Initially, the agreement on such transactions was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. The association is seeking to reduce dependence not only on the US dollar, but also on euros, yens, and British pounds in financial transactions.

“We have something that was absolutely unbelievable two months ago,” Escobar emphasized.

De-dollarization has been discussed for decades. For instance, Mikhail Khazin, a Russian economist and publicist, who served in the Working Center for Economic Reforms under the Boris Yeltsin government in the 1990s, and his co-author Andrey Kobyakov predicted the demise of the US dollar dominance roughly 20 years ago in their book titled “The Decline of the Dollar Empire and the End of Pax Americana.” While the idea has been in the air for quite a while, why is it that this phenomenon has only now started to gain critical mass?

“We can even establish a date for it,” responded Escobar. “February last year, with that freezing, confiscation, stealing of Russian foreign reserves. And the Global South as practically as a whole started asking themselves from Latin America to Africa to South East Asia, ‘if they can do this with a nuclear superpower, they can do it with any one of us snapping their fingers’. So that’s why the coordination inside these multilateral organizations and in other forums picked up astronomic speed.”

To illustrate his point, the journalist referred to the swift development of BRICS with a staggering 19 countries currently on the list to join the organization. Among them the strongest candidates are Iran, Argentina, Algeria, as well as the United Arab Emirates, Turkiye, Egypt, Kazakhstan, and Indonesia, as per the geopolitical analyst.

“So these are all strong middle rank powers from anywhere,” Escobar said. “And they’re going to start discussing the now notorious BRICS alternative currency. So they have to speed up this conversation and let’s hope that they are going to start discussing it in conjunction with the Eurasian Economic Union, which is much more advanced, and the Shanghai Cooperation Organization.”

Escobar believes that nothing short of a breakthrough in this respect could occur as early as next year.

          Brazil and China have already dropped the dollar in trade between the two countries.  So have Argentina and China.

          China and France recently settled a natural gas trade in Yuan (the Chinese currency).  (Source:

          The move around the world away from the US Dollar continues to accelerate. 

          If you have not yet diversified your portfolio so that some of your assets are not in US Dollars, it’s time to take a closer look.  For many retirees and aspiring retirees, up to 20% of one’s portfolio in hard assets like gold and silver may be prudent.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

The Coming Storm in Real Estate

Did you hear about the latest lunacy out of Washington?

          Mark my words; it will create yet another headwind for a real estate market that is beginning to flounder without this change.

          Seems that homebuyers with good credit and larger down payments will now pay more in mortgage origination fees than poorly qualified, more marginal home buyers.


          You can’t make this stuff up.

          This from “The New York Post” (Source:

A little-noticed revamp of federal rules on mortgage fees will offer discounted rates for home buyers with riskier credit backgrounds — and force higher-credit homebuyers to foot the bill, The Post has learned.

Fannie Mae and Freddie Mac will enact changes to fees known as loan-level price adjustments (LLPAs) on May 1 that will affect mortgages originating at private banks nationwide, from Wells Fargo to JPMorgan Chase, effectively tweaking interest rates paid by the vast majority of homebuyers.

The result, according to industry pros: pricier monthly mortgage payments for most homebuyers — an ugly surprise for those who worked for years to build their credit, only to face higher costs than they expected as part of a housing affordability push by the US Federal Housing Finance Agency.

“It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post.

“It’s unprecedented,” added David Stevens, who served as Federal Housing Administration commissioner during the Obama administration. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.” 

The tweaks could further complicate the strenuous mortgage application process and add more pressure on a core segment of buyers in a housing market already in the midst of a major downturn, the experts added. The average 30-year mortgage rate is hovering at 6.27% as of last week — up from about 5% one year ago and more than twice as high as it was two years ago, according to Freddie Mac data.

Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.

“This was a blatant and significant cut of fees for their highest-risk borrowers and a clear increase in much better credit quality buyers – which just clarified to the world that this move was a pretty significant cross-subsidy pricing change,” added Stevens, who is also the former CEO of the Mortgage Bankers Association.

LLPAs are upfront fees based on factors such as a borrower’s credit score and the size of their down payment. The fees are typically converted into percentage points that alter the buyer’s mortgage rate.

Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.

When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate. On a $400,000 loan with a 6% mortgage rate, that buyer could expect their monthly payment to rise by about $40, according to calculations by Stevens.

Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.

When absorbed into the long-term mortgage rate, that equates to a 0.4% to 0.5% discount.

The FHFA-ordered overhaul of LLPAs affects purchase loans, limited cash-out refinances and cash-out refinance loans.

          Yep, you read that correctly.  If you have a credit score of 770 and have 20% down, you’ll now pay more for your mortgage, while someone with a 600 credit score, up to their neck in debt, will pay less.

          This will be an additional drag on real estate moving ahead in a real estate market that is already struggling.  While residential real estate is slowing, the commercial real estate market is really hurting, with more pain on the horizon.

          This from “USA Today” (Source:

In February, a PIMCO-owned office landlord defaulted on an adjustable rate mortgage on seven office buildings in California, New York and New Jersey when monthly payments rose due to high interest rates.

Brookfield, the largest office owner in downtown Los Angeles, that month chose to default on loans on two buildings rather than refinance the debt due to weak demand for office space.

They are a bellwether for what is likely to come, as more than half of the $2.9 trillion in commercial mortgages will be up for refinancing in the next couple of years, according to Morgan Stanley.

“Even if current rates stay where they are, new lending rates are likely to be 3.5 to 4.5 percentage points higher than they are for many of CRE’s existing mortgages,” wrote Morgan Stanley Chief Investment Officer Lisa Shalett, in a recent report.

Even before the collapse of Silicon Valley Bank and Signature Bank in March, the commercial real estate market was dealing with a host of challenges including dwindling demand for office space brought on by remote work, increased maintenance costs and climbing interest rates.

With small- and medium-size banks accounting for 80% of commercial real estate lending, the situation might soon get worse, says experts.

Commercial property prices could fall as much as 40% “rivaling the decline during the 2008 financial crisis,” forecast Morgan Stanley analysts.

“These kinds of challenges can hurt not only the real estate industry but also entire business communities related to it,” says Shalett.

          While the Morgan Stanley analysts are forecasting a 40% decline in commercial real estate values, I’d forecast more downside than that.  With nearly $3 trillion in commercial mortgages in existence, a 4% increase in interest rates on mortgage renewals on properties that may already be having difficulty cash flowing could be the difference between surviving and foreclosure.

          According to the “USA Today” article, the commercial real estate sector is already in trouble.  Commercial real estate includes hotels, office buildings, and shopping centers. 

          Not surprisingly, office space is having the most difficulty.  44% of office building loans were in delinquency in 2021 when measured by volume.

          That is simply a huge number.

          This will undoubtedly lead to additional problems in the banking sector.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

Crazy US Treasuries and A US Dollar Forecast

Last week, here in “Portfolio Watch,” I discussed some of the movement away from the US Dollar globally.

          This week, something else very interesting occurred.  There is now a HUGE disparity between the yield on a 1-month US Treasury bill and a 2-month US Treasury bill.  This from Wolf Richter (Source:

Today was another weird mess – and by far the biggest weird mess – in a series of daily weird messes in the very short end of the Treasury market, with Treasury securities that have remaining maturities of around one month. The one-month yield plunged 55 basis points today to 3.40% at the close – meaning prices of these securities jumped amid huge demand. Intraday was down as much as 75 basis points. Panic-buying frenzy! Since March 31, the one-month yield has plunged 134 basis points (red line below).

But, but, but… the two-month yield – so tracking Treasuries maturing in about two months – was very well behaved, smiled all day long, ticked up 1 basis point to 5.04%, and was up 25 basis points since March 31 (green line).

There is now an unspeakably crazy spread of 164 basis points between the one-month yield and the two-month yield – a sign that some people are panicking and piling into whatever they will be out of at face value in about one month.

This is US Treasury market activity that is truly unprecedented.

          There is so much demand for 1-month US Treasuries that the yield fell to 3.4%.  Yet, the demand for 2-month US Treasuries hasn’t changed much.  As Richter notes, there is a difference in yield of 1.64% (164 basis points) between a US Government debt maturing in one month versus US Government debt maturing in two months. 

          That begs the question, why?

          More from Richter:

The cost of insuring US government debt against default has been rising for weeks. Today, the spread on 5-year US credit default swaps jumped further, to a decade high, nearly doubling from the beginning of the year, according to S&P Global Market Intelligence.

There is now a lot of speculation why some people are panickily piling into something that they will get paid back in about one month, and why they’re so eager to pile into it that they’re paying extra to do so, while the rest of the bond market is just sort of fine, within the massive inversion of the yield curve. The stock market doesn’t really care about anything anyway. So, for most people, today was a non-event.

But some people are getting antsy about a US default.

The debt-ceiling farce being performed currently in Congress could turn from a mildly entertaining political show that has been played 79 times since 1960, and whose ending everyone knows, into a truly hilarious financial show with a new ending where the debt ceiling isn’t lifted, and where the US will then default on some of its obligations, and where everyone in Congress – these folks are rich – will lose 60% or whatever of the value of their financial assets in no time.

I’m curious to see how they would spin that one. Surely, everyone would blame everyone else. I’m also curious if anyone in Congress is actually hedging their financial assets against that kind of event.

Today’s problem was that tax receipts from Tax Day were somewhat lackluster, which might move the out-of-money-date, the X-date, a little closer than previously anticipated.

The X-date is when the Treasury Department will run out of “extraordinary measures” and will run out of cash in its checking account, the Treasury General Account at the New York Fed.

The Treasury Department might then begin to prioritize what it will pay and what it will not pay, for example it would stop paying for salaries, travel reimbursements, and toilet paper for everyone in Congress. At least, that’s where I would start.

If the debt ceiling doesn’t get raised quickly after the initial failure to raise it, eventually, the US government might not have enough cash on hand to be able to redeem a bond issue when it matures, and holders of these securities who thought they would get paid face value at the end of June might not get paid anything at the end of June, which would represent a maturity default, which would be very messy. Globally.

Obviously, this isn’t going to happen, knock on wood. The good folks in Congress are surely too worried about their financial wealth, and surely, sheer greed will force them to agree on a deal. But the bet today was that maybe, just maybe, this calculus could be wrong. And it infused a little bit of suspense – as they usually try to do – into the farce so that not everyone will fall asleep, and so that they’ll get a little more political traction with it.

          As Richter notes, could it be that investors are piling into one-month Treasuries and taking a much lower yield because they are concerned that the x date to which Richter refers is between one and two months out?

          Meanwhile, as the Washington politicians negotiate how to raise the debt ceiling, the rest of the world is moving away from the US Dollar.  Past RLA Radio guest, Dr. Charles Nenner recently did an interview with Greg Hunter of “USA Watchdog” with some comments on this topic.  Here is a bit of what he said (Source:

Renowned geopolitical and financial cycle expert Charles Nenner has been warning his war cycles are going up.  Nenner also predicted a few years back that, at some point, the U.S. dollar cycle would be headed down—way down.  The future is here, and Nenner explains, “We have known each other for many years, and I said the dollar is going to hold up, but not anymore, not anymore.  It is really in trouble.  There is actually no reason to be in the dollar.  They especially underestimate this BRICS situation, and all the countries will be forming an anti-dollar. . . . Saudi Arabia is coming onboard, and that means the end of the dollar as the reserve currency.”

Nenner says his cycles see, “The dollar going down to 70 on the dollar index.”  It’s a bit over 100 now, but it gets worse.  Nenner points out, “I don’t want people to get depressed, but I am really worried.  If the U.S. does not rule the world any more. . . . They think they can still tell the world what to do.  Physically, the Americans are in danger, and they don’t seem to understand that. . . .  The economy is really going to suffer.   If the dollar goes really low, we could have a small bounce in the economy because it’s good for exports.  That’s just a fooling bounce for people.  Longer term, it’s just finished.

            Given these circumstances, it makes sense to own some assets in your portfolio that are not denominated in US Dollars.  While there are many ways to accomplish this, one of the easiest ways is to own precious metals.

          If you’d like help or to talk about metals further, call my office at 1-866-921-3613.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

Have You Heard of Unicoin?

          It’s as unsettling as it is interesting.

          As I have been observing from time to time in “Portfolio Watch”, there are currency changes taking place around the world.

          As I noted last week, citing an article from Michael Maharrey, the move away from the US Dollar worldwide is accelerating, with China and Brazil the most recent countries to execute a trade agreement that bypasses the US Dollar in bilateral trade.  The agreement has the two countries using their own currencies rather than the US Dollar.

          Saudi Arabia has already announced that the country would entertain using currencies other than the US Dollar for the country’s oil sales.

          This past week, currency changes continued.  The International Monetary Fund announced a new digital currency called “The Universal Monetary Unit”.  This from Michael Snyder (Source:

A new global currency just launched, but 99 percent of the global population has no idea what just happened.  The “Universal Monetary Unit”, also known as “Unicoin”, is an “international central bank digital currency” that has been designed to work in conjunction with all existing national currencies.  This should set off alarm bells for all of us, because the widespread adoption of a new “global currency” would be a giant step forward for the globalist agenda.  The IMF did not create this new currency, but it was unveiled at a major IMF gathering earlier this week

Today, at the International Monetary Fund (IMF) Spring Meetings 2023, the Digital Currency Monetary Authority (DCMA) announced their official launch of an international central bank digital currency (CBDC) that strengthens the monetary sovereignty of participating central banks and complies with the recent crypto assets policy recommendations proposed by the IMF.

Universal Monetary Unit (UMU), symbolized as ANSI Character, Ü, is legally a money commodity, can transact in any legal tender settlement currency, and functions like a CBDC to enforce banking regulations and to protect the financial integrity of the international banking system.

          As the press release quoted above indicates, this new “Universal Monetary Unit” was created by the Digital Currency Monetary Authority.

          So who in the world is the Digital Currency Monetary Authority?

          Honestly, I had no idea until I started doing research for this article.

          The press release says that the organization consists of “sovereign states, central banks, commercial and retail banks, and other financial institutions”…

The DCMA is a world leader in the advocacy of digital currency and monetary policy innovations for governments and central banks.  Membership within the DCMA consists of sovereign states, central banks, commercial and retail banks, and other financial institutions.

          Basically, it sounds like a secretive cabal of international banks and national governments is conspiring to push this new currency down our throats.

          We are being told that the “Universal Monetary Unit” is “‘Crypto 2.0”, and those that created it are hoping that it will be widely adopted by “all constituencies in a global economy”

The DCMA introduces Universal Monetary Unit as Crypto 2.0 because it innovates a new wave of cryptographic technologies for realizing a digital currency public monetary system with a widespread adoption framework encompassing use cases for all constituencies in a global economy.

          I don’t know about you, but this sounds super shady to me.

          Of course, the Digital Currency Monetary Authority is not the only one that has been working on a new digital currency.

          The UK has also been working on one.

          The same is true for the European Union.

          And would it surprise anyone that the Biden administration is touting the potential benefits of a “digital form of the U.S. dollar”?  The following comes from the official White House website

A United States central bank digital currency (CBDC) would be a digital form of the U.S. dollar. While the U.S. has not yet decided whether it will pursue a CBDC, the U.S. has been closely examining the implications of, and options for, issuing a CBDC. If the U.S. pursued a CBDC, there could be many possible benefits, such as facilitating efficient and low-cost transactions, fostering greater access to the financial system, boosting economic growth, and supporting the continued centrality of the U.S. within the international financial system.

          I don’t think that it is a coincidence that governments all over the Western world are simultaneously developing CBDCs.

          And the IMF has actually already put together an extensive handbook “to assist central banks and governments throughout the world in their CBDC rollouts”

The International Monetary Fund (IMF) is putting together a Central Bank Digital Currency (CBDC) handbook to assist central banks and governments throughout the world in their CBDC rollouts.

Published publicly on April 10, the “IMF Approach to Central Bank Digital Currency Capacity Development” report outlines the IMF’s multi-year strategy for aiding CBDC rollouts, including the development of a living “CBDC Handbook” for monetary authorities to follow.

          A lot of people out there will cheer when these digital currencies are introduced.

          But it is imperative to understand that once everyone is using them, your financial privacy will be almost totally gone.

          Authorities will be able to track virtually everything that you buy and sell, and I am sure that they won’t hesitate to use that information against you.

          Needless to say, the potential for tyranny in such a system is off the charts.

          Can you imagine a world in which you are restricted from buying meat for a while because you have already used your “carbon credits” for the month?

          Your “financial privileges” could potentially be restricted at any time at the whim of a government bureaucrat, and if you are a big enough troublemaker, you could be “de-platformed” from the system permanently.

          Of course, in order for such a system to have real teeth, cash and other forms of payment will need to be phased out, and that is precisely what is happening right now in Europe.  The following comes from the official website of the European Parliament

To restrict transactions in cash and crypto assets, MEPs want to cap payments that can be accepted by persons providing goods or services. They set limits up to €7000 for cash payments and €1000 for crypto-asset transfers, where the customer cannot be identified.

          Ultimately, they will just keep lowering the limits until the use of cash is almost completely eliminated.

          Everyone will be slowly but surely forced on to the new digital system, and it will be a system that they control with an iron fist.

          And most people will willingly go along with it.  These days, most people are just scraping by from month to month, and one recent survey found that 70 percent of all Americans are “financially stressed” at this point.

          Most Americans simply do not care that these new digital currencies could open a door for great tyranny.

          They just want to be able to pay the bills and take care of their families, and if our politicians tell them that this new system is good for the economy, they will be all for it.

          But those of us that are awake know that more globalism doesn’t lead anywhere good.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

More Evidence the US Dollar is Dying?

          The move away from the US Dollar around the globe continues to accelerate, as confirmed by a brief review of the headlines from the past week.

          This is from Michael Maharrey (Source: 

More bad news for the dollar.

Last week, China and Brazil announced a trade deal in their own currencies, completely bypassing the dollar.

This represents another small shift away from dollar dominance.

Under the new deal, Brazil and China will carry out trade directly exchanging yuan for reais and vice versa instead of first converting to dollars.

In a statement, the Brazilian Trade and Investment Promotion Agency (ApexBrasil) said the agreement would “reduce costs” and ” promote even greater bilateral trade and facilitate investment.”

Brazil ranks as the largest Latin American economy, and China is its biggest trade partner. Trade between China and Brazil amounts to some $150 billion per year. China overtook the US as Brazil’s number-one trading partner in 2009.

China also has dollarless trade agreements with Russia, Pakistan and Saudi Arabia.

This is the latest blow to dollar hegemony. Earlier this year, Saudi Arabia Finance Minister Mohammed Al-Jadaan said the country is open to discussing trade in currencies other than the US dollar. This could mark the beginning of the end of petrodollar exclusivity. And in March, Reuters reported that recent oil deals between India and Russia have been settled in currencies other than dollars.

We are still a long way from the dollar losing its status as the world reserve currency, but its dominance is clearly eroding.

          And this from Matthew Piepenberg (Source:

As I’ve presented elsewhere, history (borrowing from Mark Twain) may not repeat itself, but it certainly rhymes.

And toward this end, Rutherglen and Gromen have shown the poetry of rhyming patterns in the context of the ever-changing petrodollar politics, which, modestly, we too foresaw over a year ago.

As we warned from literally day-1 of the western sanctions against Putin, the end result would be disastrous for the West in general and the USD in particular.

And nowhere was this US Dollar prognosis truer than with regard to the petrodollar—i.e., those good ol’ days when nearly every oil purchase was linked to the USD.

However, and as Gromen and Rutherglen suggest, that oil-USD linkage was never a sure thing in the 70’s, and will be even less of a sure thing in the years ahead.

And this, folks, will have a massive impact on gold in the years ahead.

How so?

Let’s dig in.

Although still in diapers when Nixon closed the gold window in 71, and still watching Saturday morning cartoons when gold soared from $175/ounce in 1975 to over $800/ounce less than five years later…

… I am at least old enough now to glean a few historical lessons and patterns which may point toward similar and rising gold valuations tomorrow.

Gold, as Gromen and Rutherglen remind, was ripping in the late 70’s largely because it was not yet a foregone conclusion that oil would be pegged to USDs.

In that bygone era of disco, ABBA, wide neckties and checkered suits, neither OPEC nor Europe was against the idea of settling oil transactions in gold rather than USTs.

This was because those very same USTs (thanks to Nixon’s welch) were not very well…loved, trusted or valued in the 70’s.

(See where I’m going [rhyming] with this?)

Fortunately, Paul Volcker was able to seduce the oil nations into trusting Uncle Sam’s fiat money by cranking (and I do mean cranking) interest rates to the moon to restore faith in the UST and hence give OPEC the confidence to sell oil in dollars rather than settle in gold.

Specifically, Volcker took rates to 15+%, a move which placed real rates on that all-important 10Y UST at +8%.

Such hawkish policy was thus a game changer for making the petrodollar a reality and hence the USD the world’s reserve energy asset (and bully) for a generation to come.

Unfortunately, and thanks to Uncle Sam’s embarrassing bar tab (i.e., debt levels), those days, and those USDs and USTs, have fallen from grace, and hence are slowly falling off the radar of OPEC.

For this, we can also thank an openly cornered Powell’s so-called war on inflation, which has, among so many other backfired fiascos, led to a slow and steady process of de-dollarization and declining faith in that oh-so-important global IOU, otherwise known as the UST.

The Oil Nations Aren’t Stupid

The OPEC folks know that Uncle Sam’s IOU’s aren’t what they used to be.

Unlike Volcker, however, Powell can’t get the 10Y UST to an 8% real (i.e., inflation-adjusted) rate.

Even his so-called “hawkish” nominal rates of 5% have crushed credit markets, Treasuries and nearly everything else in its path.

 And if Powell even dreamed of pushing rates to 15%, ala Volcker to seduce OPEC, he would literally murder the entire US economy with a double-digit rate hike against a $31T public debt pile.

In short, there is simply no way to compare Volcker’s options in the 70’s to Powell’s debt reality in 2023.

This means the Fed can’t do what will be needed this time around to prevent OPEC from looking outside the USD or UST and hence inside the gold markets as a primary asset to settle its energy transactions.

The days of the mighty petrodollar, as I warned (in two languages) over a year ago herehere, and here, are slowly but steadily coming to an end.

Think about that for a second.

Or better yet, look at it for a second—with kudos again to Gromen and Rutherglen.

          Piepenberg makes the same argument that I have been making – the Fed will HAVE to pivot.  It’s either that or destroy the economy.  I make this statement understanding that there are some very bright analysts who disagree.

          But, the emerging economic and geo-political conditions indicate that there can be no other outcome in my view.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

Update:  Stocks and Silver

          There were two big market movers last week.  Stocks and silver both advanced between 3% and 4% on the week.

          As far as stocks are concerned, the downtrend line that has been in place since January of 2022 has now been broken to the upside, as noted on the weekly chart of an exchange-traded fund that tracks the Standard and Poor’s 500.


          Note the trend line on the chart that has been drawn from the beginning of calendar year 2022.  The highs made in early February took out the highs made in December.  However, last week’s market highs did not take out the highs made in early February.  At this point, the primary trend in the S&P 500 is down but on a more intermediate term, stocks are in a trading range.

          From a fundamental perspective, stocks remain overvalued by many measures.  Robert Burgess makes this observation about the performance of the S&P 500 (Source:

The benchmark S&P 500 Index is wrapping up its second straight quarterly gain, rising 5.50% through Thursday and adding to the 7.08% surge in the final three months of 2022. This will be cheered as good news, confirming the stock market’s recovery from last year’s bear market and resiliency in the face of stubbornly high inflation, rising interest rates, and bank failures. Don’t fall for it.

Underneath those topline numbers lurks a disturbing development — a very small percentage of stocks actually account for the rise. If not for a handful of highfliers such as Nvidia Corp., Meta Platforms Inc., Tesla Inc., Warner Bros Discovery Inc., and Advanced Micro Devices Inc., which all chalked up gains of between 50% and 87%, the S&P 500 would be struggling. In fact, when all stocks are weighted equally, the index is actually little changed, rising less than 0.5% for the quarter. Broader measures of the stock market, such as the New York Stock Exchange Composite Index, are essentially flat.

On Wall Street, this is known as bad breadth and a sign that despite the outward appearance of health, all is not well with the stock market. Longtime Wall Street watcher Ed Yardeni, who is credited with coining terms such as “bond vigilante” and “Fed model” highlighted the diverging performance between the S&P 500 and its equally weighted alternative in a note to clients this week. He pointed out that the ratio between the two tends to peak before recessions — making the recent January high a cause for worry. Other measures of breadth also signal weakness: the number of equities on the New York Stock Exchange trading above their 200-day moving average is lower than the average for the past decade; the same is true for the number of stocks hitting new 52-week highs less those touching 52-week lows.

          Breadth is an important indicator of the health of a rally in stocks.  If the advance has most stocks participating, the rise in stocks is considered to be more sustainable.  If the advance is propelled by a small number of stocks, it is not as likely to be sustainable long term.  Think about it using a military analogy.  If the charge is led by the generals and the troops aren’t following, the mission is unlikely to be successful.

          That describes the current stock market advance.

          The “Buffet Indicator” is a stock valuation metric popularized by legendary investor Warren Buffet in an interview about 20 years ago.  The stock market valuation measure takes total stock market capitalization and divides it by gross domestic product.  In other words, it takes the devaluing US Dollar out of the measure and compares the total value of stocks measured in dollars and divides by gross domestic product measured in dollars.  Since both statistics are measured in dollars, it is a comparison rather than a stand-alone dollar measure.

          This chart (Source: shows the current value of the Buffet Indicator compared to where the indicator has stood historically.

          Notice that the Buffet Indicator currently stands at 140%.  While that is down significantly from the 211% of late 2021 when I called the market top, it is just below where the decline began at the time of the tech stock bubble bursting and well above where the decline began at the time of the financial crisis.

          Since I believe that the odds are fairly high that we may be on the verge of repeating the financial crisis, the downside for stocks from here could be greater than in 2007 – 2008.

          As far as silver is concerned, it’s no secret to longer-term readers that I have been a silver bull.

          My silver optimism is purely based on fundamentals.

          I expect that inflation will continue and differ with some of my RLA Radio guests as to what the future policies of the Federal Reserve will be.

          There are some bright people whose opinions I respect and value who believe the Fed will stay the course and continue tightening to get inflation under control.

          I have long held that the Fed would pivot at some future point, and to a certain extent, the central bank already has.

          The recent bank bailouts were backstopped by the Fed via currency creation.

          Past RLA Radio guest Peter Schiff had this to say on the topic recently.  (Source:

In just two weeks, the Federal Reserve added nearly $400 billion to its balance sheet. That’s money created out of thin air.  That’s inflation. And so, when you do that, you destroy the value of all the money that’s already in circulation. So, Americans are going to pay, not because they are taxpayers, but because they are US dollar owners and US dollar earners. Everybody’s paycheck is going to be reduced in value because of the bank bailouts. These bailouts are endangering everybody’s bank deposits, even the banks that are solvent. Now it’s inflation that is the risk. And so it doesn’t matter if your bank fails. You’re still going to lose. In the event that your bank failed, you lose your money. But now, because the government won’t let the banks fail, everybody who has a bank account is going to lose purchasing power.”

          I am also bullish on silver due to increasing industrial demand.  Although technically speaking, it may not be the best time to invest in silver, over the longer term, I expect the metal to move much higher.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

Inflation and Debt Realities

          Ever since the updated “New Retirement Rules” book was published in 2016, I have been warning that debt excesses would lead to a severe deflationary environment.

          While such an economic climate has not yet fully emerged, there are signs that we are entering such a period.  Stocks have fallen 20% from their peak, real estate markets are running out of steam, and the Federal Reserve is raising interest rates to attempt to tame inflation.  Ironically, Federal Reserve easy money policies have led to the inflation we have been experiencing, and now the Fed is attempting to solve a problem that it had a big role in creating.

          Meanwhile, as Americans are trying to deal with the inflationary environment, credit card debt has been rising – now topping $1 trillion for the first time in history.  This1 from “ABC News”:

U.S. consumers’ total credit card debt exceeded $1 trillion for the first time, according to a new study by the personal finance website WalletHub.

Consumers took on an additional $92.2 billion in debt last year, the highest single-year amount since 2007. The average U.S. household owes $8,600 on credit cards, WalletHub found.

The accumulation of debt reflected Americans’ confidence in the economy, according to Jill Gonzalez, a senior analyst at WalletHub.

“We haven’t seen anything like this,” she told ABC News. “Consumer confidence is at its highest point. Since the recession, people have been saving up for houses, cars … new furniture and appliances, which often get charged on credit cards.”

            I find it interesting that Ms. Gonzalez interprets such high credit card debt as somehow being good for the economy.

          In my view, Ms. Gonzales’ rationale for such a conclusion is completely nonsensical.  If consumers have indeed been “saving up” for major purchases like cars, furniture, and appliances, it seems that credit card debt would not be higher; instead, it would be lower.

          If I were saving up for a major purchase and elected to put the purchase on a credit card, I would be paying off the credit card balance on the due date to avoid interest charges.

          This is NOT what is happening.

          Instead, consumers are carrying balances on their credit cards. 

          And a quick review of the retail sales numbers confirms that this record-high level of credit card debt is not due to retail purchases.  This2 from “Market Watch”:
The numbers: Sales at retailers fell 0.4% in February and declined for the third time in four months, pointing to a slowdown in consumer spending as higher interest rates take a bite out of the U.S. economic growth.

Retail sales are a big part of consumer spending and offer clues about the strength of the economy. Sales had been forecast to fall 0.4%, based on a Wall Street Journal poll of economists.

Setting aside car dealers and gas stations, U.S. retail sales were still fairly tepid. Receipts fell at department stores, home centers and outlets that sell home furnishings, clothing and sporting goods.    

        Seems that these numbers invalidate the opinion of Ms. Gonzales.

          It seems more likely that the reason credit card balances topped $1 trillion is that consumers are feeling the pinch of inflation and dealing with it by taking on debt.

          Of course, this will only exacerbate the debt problem and make the eventual deflationary environment worse.

          Another headwind for the economy and the government is the ever-increasing cost of servicing the US Government’s debt.

          This4 from “Global Macro Monitor”:

Interest payments on the national debt during the current fiscal year (October to February) are up 29 percent y/y, one of the fastest-growing expenditure components of the Federal budget (see table). 

Revenues are down, especially individual income taxes, which may reflect the slowing economy.  Theory dictates (ceteris paribus) that government tax revenues should be rising with inflation, however.  Hmmm. 

The fact income tax receipts are lower but self-employment tax revenues (1099 employees) are higher, coupled with what is happening with the employment data, can we hypothesize that high income earners are leaving the workforce (or getting fired) and starting their own businesses, such as consultants, for example?  Or could it be just a timing issue? 

The overall deficit is exploding, btw, up 50 percent.  

If the current situation normalizes and Treasury securities lose their flight-to-quality bid, interest rates are going to spike faster than one of Elon’s rockets

            Interest costs to service the debt are higher, and tax revenues are lower (can you say recession?).

          Worse yet, can you say financial crisis ahead?  Whether it is around the corner or a few years off, the current spending trajectory is not sustainable. 

          As the economy slows, expect tax revenues to decline and deficits to widen even further.

          The overriding theme of the current world economy is excessive debt.  Debt excesses exist in the private sector and on the balance sheet of nearly every world government.

          Applying a little common sense (which has almost gone the way of the dinosaur) to the current worldwide debt situation has one concluding that there is no way for the debt to be paid.

          The only question is how long it will be before the full reset arrives.

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.

The Problem with Fractional Reserve Banking and an Interesting Irony

          Last week, I discussed the failure of Silicon Valley Bank and the harsh realities of the fractional reserve banking system.

          Since I wrote that piece last week, there have been more bank failures and bank rescue packages.

          Signature Bank followed Silicon Valley Bank.  Credit Suisse was propped up with a $54 billion loan from the central bank of Switzerland.  First Republic Bank is being bailed out by bigger banks.

          As I have been stating here for a VERY long time, when there is too much debt to be paid, it won’t be paid.  And, since banks have debt as assets, when debt goes unpaid, banks fail.

          In the case of Signature Bank, there is an interesting ancillary story.

          First, the facts around the Signature Bank failure.  While I am no longer a fan of the editorial content of “Forbes”, the magazine did report on the Signature Bank failure (Source:

Signature Bank, a New York-based regional bank that became a leader in cryptocurrency lending, shuttered suddenly on Sunday, marking the third-biggest bank failure in U.S. history just two days after the country’s second biggest failure, Silicon Valley Bank, rocked the stock market and reignited fears of “challenging and turbulent” economic times.

New York’s Department of Financial Services announced Sunday it had taken possession of the bank, which had more than $110 billion in assets and more than $88 billion in deposits as of the end of last year.

Signature Bank became the third regional bank to collapse in a matter of weeks, following the high-profile collapse of California-based crypto-friendly banks Silvergate Bank and Silicon Valley Bank, whose failure spooked investors wary of widespread financial vulnerability.

          Interestingly, one of the Signature Bank board members is former US Congressman and co-sponsor of the Dodd-Frank Act, Mr. Barney Frank.

          If you’re not familiar with the Dodd-Frank Act, it was passed in 2010 in response to the banking failures at the time of the Great Financial Crisis.  Dodd-Frank (among other things) created the Financial Stability Oversight Council.  According to the Dodd-Frank Act, the FSOC has three primary purposes (Source:

  1. “To identify risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected bank holding companies or nonbank financial companies, or that could arise outside the financial services marketplace.
  2. To promote market discipline by eliminating expectations on the part of shareholders, creditors, and counterparties of such companies that the U.S. government will shield them from losses in the event of failure.
  3. To respond to emerging threats to the stability of the U.S. financial system.”

I find number 2 above especially interesting.  Reading it, one would logically conclude that bailouts would be a thing of the past.  But, as we all know, bailouts are once again being used to make depositors, even uninsured depositors, whole.  This from “CBS News” (Source:

The startling collapse of Silicon Valley Bank and Signature Bank continued to ripple across the American economy even as the U.S. raced to stabilize the banking system.

In a bid to contain the risk of contagion, financial regulators announced Sunday that they will guarantee all deposits at the banks, while President Biden said Monday that “Americans can have confidence that the banking system is safe.”

          In the case of the Signature Bank failure, there is an interesting, ironic side story.  Seems that the co-sponsor of the Dodd-Frank Act, former congressman Barney Frank, is on the Board of Directors of Signature Bank.  This from “The Wall Street Journal” (Source:

Life is full of irony, but it’s hard to think of a richer one than Barney Frank sitting on the board of the failed Signature Bank. The former Congressman who was the scourge of Wall Street, the co-author of the Dodd-Frank Act that was supposed to keep the banking system safe, wasn’t able to prevent his bank from becoming one of the first casualties of the latest bank panic. 

It’s amusing to think of Mr. Frank cashing a check as a bank director, but then even left-wing former Congressmen have to make a living. And in Mr. Frank’s case, it has been a nice one, with cash compensation of $121,750 and stock awards of $180,182 in 2022 alone. He’s been on the board since 2015. Perhaps out of office and late in life, Mr. Frank developed a strange new respect for capitalism.

Mr. Frank once famously said he wanted to “roll the dice” to ramp up lending on Fannie Mae and Freddie Mac before they failed. Signature seems to have done the same as it dove into crypto during the Federal Reserve-fueled financial mania.

In recent interviews, Mr. Frank is blaming crypto for the bank’s demise in the wake of the Silicon Valley Bank (SVB) closure on Friday. He told Politico that Signature was in good shape as recently as Friday, but was then hit by “the nervousness and beyond nervousness from SVB and crypto.” He said the bank is the “unfortunate victim of the panic that really goes back to FTX,” the failed crypto exchange.

Mr. Frank seems to blame regulators for taking a needlessly hard line against Signature because of crypto. “I think that if we’d been allowed to open tomorrow, that we could’ve continued,” Mr. Frank told Bloomberg. “We have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit.”

We sympathize with Mr. Frank because the Biden Administration really does want to purge the U.S. banking system of any dealings with crypto companies. It may be that the regulators decided to roll up Signature Bank because of its crypto association. It wouldn’t be the first time regulators saw an opening in a crisis to achieve a political goal by other means.

If Mr. Frank is right, he now knows how hundreds of thousands of other people in business feel when regulators panic for political reasons and look for businesses to shut or blame.

As for the failure of Dodd-Frank’s regulatory machinery to prevent the latest bank failures, Mr. Frank is taking no blame. He says the reforms made the system sturdier, and he also dismisses claims by Sen. Elizabeth Warren that some modest Trump-era changes in bank rules for mid-sized banks made a difference.

“I don’t think that had any effect,” Mr. Frank told Bloomberg. “I don’t think there was any laxity on the part of regulators in regulating the banks in that category, from $50 billion to $250 billion.” He ought to know from where he sat on the Signature board.

Mr. Frank is getting a painful education in the difficulty of running a company when politicians don’t like the business you’re in.

          The reality is, as I noted last week, that under the fractional reserve banking system, even banks that would be considered healthy by current standards can be taken out by a bank run by depositors.  This is a reality that was reiterated in a recent MSNBC interview by former FDIC Chair Sheila Bair.  (Source:

Bair added that the “immediate problem” posed by the situation in the banking system is “if people start to panic and take deposits out of a perfectly healthy bank, they’re going to force that bank to close.”

“It’s the classic Jimmy Stewart problem,” she told host Neil Cavuto. “We deposit money into a bank, they lend it out, they invest it in securities, it’s not all sitting in a vault. If you try to get all the money out at once, you’re going to force the bank to unnecessarily fail.” 

According to Bair, actions taken by the government have created “mass confusion” that could cause efforts to support the banking system to backfire. Acknowledging there are some banks with problems, she also emphasized that only a small percentage of the overall banking system has issues. 

“[The government is] trying to imply that all uninsured are protected, which they don’t have legal authority to do, frankly, and this is putting pressure on community banks,” she said. “It’s really troubling.”

            If you or someone you know could benefit from our educational materials, please have them visit our website at  Our webinars, podcasts, and newsletters can be found there.