“Money” ability, always win, really invincible!

The Federal Reserve has struck.

On Saturday and Sunday, after the full fermentation of the Silicon Valley bankruptcy, even in the God is not working Sunday, the wise and diligent Federal Reserve, together with the U.S. Treasury Department, the Federal Deposit Insurance Corporation, once again determined, decisive, decisive action, showing its top human history of “money capacity”.

Washington, D.C. – Treasury Secretary Janet Yelled, Federal Reserve Board Chairman Jerome H. Powell and FDIC Chairman Martin J. Gruenberg jointly issued the following statement.

Today, we are taking decisive action to protect the U.S. economy by increasing public confidence in our banking system. This step will ensure that the U.S. banking system continues to play its vital role of protecting deposits and providing access to credit for households and businesses in a way that promotes strong and sustainable economic growth.

After receiving recommendations from the FDIC and the Federal Reserve Board of Governors and consulting with the President, Secretary Yelled approved actions that will enable the FDIC to complete its resolution of Silicon Valley Bank in Santa Clara, California, in a manner that fully protects all depositors, who will have access to all of their money beginning Monday, March 13. Any losses associated with the Silicon Valley Bank resolution will not be borne by taxpayers.

“Money power” is unbeatable!

Once the joint statement was released, because the U.S. stock market has not yet opened, but once the Asian capital markets opened, U.S. Treasury yields quickly plunged, other risky and safe-haven assets were all up, gold rose more than 1%, and the Dow Jones, S&P and Nasal futures, also rose in unison to nearly 1.5%.

In yesterday’s article I specifically mentioned that Silicon Valley Bank went bankrupt due to a liquidity run, but the core root cause was not a run, but a collapse in the value of the asset side of its balance sheet, while the liability side continued to spend, thus causing a liquidity crisis.

“Why was Silicon Valley Bank, in 1 day, run into bankruptcy?”

In response to this problem, the Federal Reserve proposed an extremely targeted approach – the Bank Term Funding Program (BTFP).

The new financing program would be offered through the creation of a new Bank Term Funding Program (BTFP) that would provide banks, savings associations, credit unions, and other eligible depository institutions with loans of up to one year collateralized by U.S. Treasuries, agency debt and mortgage-backed securities, and other eligible assets that would be denominated at par. the BTFP would be an additional source of liquidity for high-quality securities, eliminating the need for the need for institutions to sell these securities quickly in times of stress.

Note that the Treasury, agency and MBS collateralized to the Fed are denominated at par, thus essentially avoiding a liquidity crisis resulting from a balance sheet collapse.

This also means that as long as the U.S. commercial banks, in accordance with the Federal Reserve, the U.S. Treasury Department’s regulatory policy to honestly buy Treasury bonds, agency bonds and MBS as ballast at the asset end, unless you are too amateurish in your own management and toss yourself to death, otherwise, even if you have a liquidity run on the problem, the Fed, which has turned paper into gold, will come to your rescue in the form of an angel.

This is the credit money system, the central bank of any country “money capacity”.

The contemporary credit monetary system with the dollar as the core –

Money power, always win, really invincible!

 

 

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