Great assessment Steve

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I'm trying to get my head round a possible route to contagion in the real (rather than financialized) economy with respect to the approach that Benjamin Graham used in valuing securities at the time of the Great Depression. If I recall correctly his approximate method to valuing a security's worth with some margin of safety was essentially (Current Assets) - (Total Liabilities).

Now suppose that we have an 'innocent' profitable company working in the real economy carrying a variety of current assets that include cash (and equivalents), accounts receivable (less bad debt provisions), a bunch of inventory, and some pre-paid expenses.

As I understand the bail-in conditions imposed on creditors by Dodd-Frank of 2010 any depositor holding deposits above $250k now, instead of holding a corporate asset of cash, now holds an equivalently sized corporate liability as it it required by law to bail-in the bad bank.

Am I missing something here or is this just the end-game in which a financialized economy kills off whatever remains of a the US's industrial economy, leaving corporations whose only assets are whatever physical inventory they carry when the merry-go-round stops?

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Steve, FDIC over the past ten years has closed more than 70 banks. Examiners go in Friday; competitor's name goes up Monday. Happens all the time.

NY Fed is not required to publish overnight bank data for two years. So I work from the premise that the system is insolvent. One look at Credit Suisse and my premise is confirmed.

The system is in continuous bailout. Too much economic froth across the Atlantic (banking) corridor depends on it.

Their perverted bank model is not broken; crony capitalism is.

Safe banking in the age of captive administration is delusion.

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The first report I saw of this was that SVB agency/treasury portfolio had dropped by 10 or 12% since the beginning of rate hikes. Same as my treasury/agency ETF holdings have. Meh. Only a couple percent more than the biggest swings over past 20 years. If that is enough to tank them… Deposit taking institutions should not be allowed to ride that close to the edge. Full stop.

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Just posted to Ellen Brown's Web of Debt post regarding this situation:

First off I really like the idea of a national infrastructure bank. However, how many times do we need to use Monetary Gifting to resolve the instabilities of the current systemic paradigm before we recognize it as the new paradigm that is needed? What is UBI? Monetary Gifting. Fiscal deficits? Monetary gifting to government contractors and employees. Bail outs to make depositors whole? Monetary Gifting. Etc., etc., etc.

But these are only momentary and incomplete reform programs. So where and when could we implement Monetary Gifting for maximum and continuous beneficial effect, and in fact to virtually implement the new paradigm of Gifting?

Why retail sale and the point of loan signing because retail sale is universally participated in which gives it aggregative/macro-economic effect and nearly everyone borrows at one time or another so its virtually universally participated in also. So a 50% Discount/Rebate policy at retail sale would continuously and universally double everyone's purchasing power, end inflation forever and even benefits enterprise by guaranteeing greatly increased demand for every one of their goods and services. A 25-50% debt jubilee at the point of loan signing would end the problem that Steve Keen and Hyman Minsky have correctly identified as the major reason economies have been unstable, namely the continual build up of PRIVATE debt resulting in debt deflation.

Finally, what is a national infrastructure bank? Its revenue gifts to contractors who will re-industrialize the economy and modernize our infrastructure.

Implementing these policies and the rest of the new paradigm taxation and regulatory regime will enable all of the leading reforms to integrate and so more quickly enable all of their goals...and make even more beneficial things to happen on a CONTINUOUS basis. Let us proceed with post haste to communicate these things so as to herd the entirety of the political apparatus toward sanity, and/or to enlighten the public about these tremendous benefits so that any pol that opposes them can suffer defeat and so we create a new monetary paradigm coalition that is greater than even the one FDR created.

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Yes, nice assessment of the current banking system's imperatives, but the problem underlying it all is the out of control and hence chaotic financialization that has grown up around and is severely integrated into the economy, and that is enforced by the current monopolistic paradigm of Debt as in burden to repay ONLY.

Financialization which is all about "money, debt and banks" is the Frankensteinian monster run loose and made "necessary" by the current paradigm, and the strategically implemented policy program of the new paradigm of Monetary Gifting can change the nature of the entire system while also enabling "creative destruction" of the cluster fuck you've criticised in your post. Turnabout is fair play. No?

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