The money supply is just fiat dollars.
Good Faith & Credit and all that rubbish.
The markets are basically saying there is no good faith & credit anymore. It is drying up as the banking emperors have no clothes.
Tangible assets.
They can loan our five dollars for every dollar they have on deposit.
Even if they charged the same interest rate that they paid, they would be getting income on four of the five dollars. They reality is that they charge at least double for the interest rates on their loans that they pay out on their deposits. So they are generating income on 4.5 dollars for every dollar on deposit.
The loan default rate is less than 2%. It might double or even triple when the economy goes south, but this is a short term risk which can be managed by tightening credit, which banks are always quick to do, at least if they are reasonably managed.
Nobody much wants to borrow money with the FED jacking up interest rates, so that is obviously hurting the ability of banks to loan plus the risk of default is increasing. Still, there are loans they can do at near zero risk of default such as one I have that is costing me 2% more than I am earning on an IRA CD. But it makes sense to pay the 2% to the bank versus 15% in additional taxes since I am nearing retirement.
So we’re heading for hyperinflation, and the Fed is going to be part and parcel of this process because why would it stop now?