Cruisin’ With Yellen And The FOMC! The Banking “Crisis” In One Chart

As The Fed attempts to fight inflation, rates are rising. Consequently, deposits are all commercial banks are falling.

The Fed just released its weekly commercial bank data dump showing deposit inflows/outflows.

1) This is for the week up to 3/15/23 (which includes the SVB collapse but nothing more)

2) ‘Large Banks’ includes the top 25 banks (which means SVB was among that group, hence, we get no indication of SVB rotation flows)

The overall data shows that domestic commercial banks saw over $98 billion in deposit outflows (seasonally-adjusted) that week to just over $17.5 trillion (8th straight week of aggregate outflows).

That is the largest (seasonally-adjusted) outflow since April 2022 (tax-related?) as we suspect much of that flowed into money-markets. Deposits have been on a steady decline over the past year or so, falling $582.4 billion since February 2022.

There was a notable rotation however with the large banks seeing deposit inflows of $117.9 billion on a non-seasonally-adjusted basis (the biggest weekly inflow since Dec 2021).

Small banks, on the hand, saw a massive $111 billion outflow (non-seasonally-adjusted)…

That is the largest weekly outflow ever (by multiples) and drops ‘small bank’ total deposits to the lowest since Sept 2021…

Bear in mind this data does not include the last 10 days, where we have US regional banks all tumbling further and Yellen offering no guaranteed deposits, FRC stock collapse amid bailouts (though that will skew the data due to that $30bn infusion), and the fear of Credit Suisse’s collapse.

Will banks start to compete for deposits? (Well not the biggest ones, for sure)…

“””The overall data shows that domestic commercial banks saw over $98 billion in deposit outflows (seasonally-adjusted) that week to just over $17.5 trillion (8th straight week of aggregate outflows).”””

The bond market has had price increases in the past couple of weeks and that could be one reason for $98 billion of deposit outflows from the banks.

Another reason for the outflow could be people who are taking cash from their checking accounts and putting the cash in their pocket in anticipation of a rainy day.

Whatever the reason for the outflow, it puts a squeeze on the banks because much of the $98 billion was invested in long term bonds and mortgages.

> She and her husband have PHDs in Economics… <

And now it’s time for a joke.

Stalin is on the reviewing stand, watching Soviet units march by. There are tanks, missile launchers, and row upon row of soldiers. At the front of the parade march a group of men in business suits carrying briefcases.

Stalin: Who are those men in business suits?
Aide: Comrade Stalin, they are economists.

Stalin: Why are they at the front of the parade?
Aide: It’s because they are the most dangerous group of them all.

Another reason for the outflow could be people who are taking cash from their checking accounts and putting the cash in their pocket in anticipation of a rainy day.
———————-

I doubt if individuals p, as a whole, would have the impact we are seeing.

The BIG money that is moving comes from large companies and investors. They see the bond holders at CS get screwed. They see the bad investments the banks have made with their deposits. The BIG money guys pay close attention to what is being done with their money. The guys who are paying close attention will move their deposits days or weeks before the average person sniffs an issue.

The dangerous time is when those big money guys have no place to move their money; because no place is safe.

The FDIC wouldn’t be able to cover a “real” run on the banks. (Multiple, “significant” banks at one time.)

Janet Yellen is the perfect toxic mix of today’s culture, a woman with a bunch of Ivy League type degrees who is also a severe partisan who will say and do anything to advance her career.

She’s perfect for a politician who wants to show how inclusive they are by nominating a woman with impeccable credentials to run very important agencies.

Once she obtained power, whatever she learned went out the window as she dutifully carried out whatever policies her overlords demanded.

Like I said, IMO very few people outside of her have done more to destroy the American Economy.

She and her husband have PHDs in Economics

According to Wikipedia, she is from the school of New Keynesian Economics and it also lists her influence as John Maynard Keynes as her influence. She is a life long Democrat. Her career is primarily academics outside of the government and The Fed. She’s either studied at or taught at the following: Brown, Harvard, Yale, Haas, Berkeley and The London School of Economics.

Not once has she had a job in the private sector. She’s never owned and operated a business. She’s never worked for a bank. She’s never traded for a living. Specifically, she never traded commodities on a trading floor. That is considered the zenith of capitalism.

This combination of academic and governmental experience combined with a lack of real world experience make her qualified to work as an entry level employee at any financial institution only if some woke DIE Human Resources officer advocated for her because she is a woman.

Yellen is the epitome of credentialism and leftism. It is important to note that one of the key characteristics of credentialism is having been surrounded by notable academics steeped in national and international recognition. In her case, that would be Nobel laureates. While that may sound impressive it actually closes one’s mind to alternates. Imagine a star struck school girl, never exposed to the raw and brutal realities of capitalism. She is blinded to reality by other credentialed individuals that never built a damn thing, and never managed anything other than a college department of highly political academics competing for professorships and government grants.

This is a house of cards, built on the backs of one credentialed person after another, each lacking real-world experience. The base of that house of cards stands John Maynard Keynes. Pull him away and the entire house comes crumbling down.

Few people’s teachings have caused more economic devastation than Keynes. His economics have been repeatedly proven a failure.

Our nation will not survive if we continue to rely on people that do not have tangible experience and success in business. More specifically, we need authentic self made men. That doesn’t include men that have risen to power through leftist corporate politics. We need men that have been through the meat grinder of capitalism. These are men have built, grown and succeeded despite temporary setbacks and failures. They need to be well schooled in finance, economics, management and technology in both academia and the business world without being mollycoddled by handouts from government or the well connected - true entrepreneurs in the rugged individualistic tradition of America.

Some of these men will feel compelled to give back to ordinary Americans by briefly using their talents and experience in government service.

Janet Yellen is not such a man.

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