Banking crisis – $400 billion outflow!

Silicon Valley Bank, Signature Bank, and First Republic Bank have already been caught up in the banking crisis in the U.S. and partially swept away. PacWest Bancorp is also affected. After Wednesday’s newspaper reported that the bank was considering “strategic options,” its stock price fell by over 50%. In Europe, Credit Suisse has “led the way.” Investors are asking whether this is already a domino effect. And at what point does it actually become a widespread crisis?

A total of $400 billion has already been withdrawn by customers from banks in the U.S. A large portion of this sum has flowed into money market funds. To offset the loss, banks have been supported with numerous emergency loans. However, these must eventually be repaid—and interest rates are no longer at ZERO, as we all know.

No one knows when this day of reckoning will come, but it will come. The limited options banks would have to balance their books all have their pitfalls. Ultimately, the only realistic option is to wait for Fed interest rate cuts. But that would undermine the interest rate reversal and allow inflation to rise further.

If customers were to leave their money in the bank, a crash could quickly wipe out a large portion of it. However, a money market fund is also not a solution if the central bank postpones the interest rate reversal, as inflation relentlessly erodes assets. In such a case, it is best to invest in tangible assets. Commodities are not only inflation-resistant but also a secure commodity business that enables attractive tax-free returns.