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US Bank Lending Drops by Record $105 Billion in Two Weeks, Trillions Moving to Money Market Accounts, Elon Musk Warns ‘Trend Will Accelerate’ – Economics Bitcoin News

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2 years ago

April 9, 2023

US Bank Lending Drops by Record 5 Billion in Two Weeks, Trillions Moving to Money Market Accounts, Elon Musk Warns ‘Trend Will Accelerate’ – Economics Bitcoin News

The banking trade in the US remains to be struggling after the collapse of three main banks. In line with statistics, financial institution lending within the U.S. has dropped by near $105 billion within the final two weeks of March, which is the biggest decline on file. Moreover, Elon Musk, a Tesla government and proprietor of Twitter, not too long ago commented on trillions of {dollars} being withdrawn from banks into cash market funds, and he insists that the “pattern will speed up.”

Statistics Nonetheless Present Obtrusive Indicators of U.S. Financial institution Weaknesses; Musk Points Warning

There are nonetheless loads of indicators exhibiting that the U.S. banking system is feeling the aftermath of a number of high-profile financial institution collapses. Throughout the first week of March, Silvergate Financial institution, Silicon Valley Financial institution (SVB), and Signature Financial institution (SBNY) closed down operations. Each SVB and SBNY had been positioned below authorities management. The U.S. Federal Reserve, Treasury, and Federal Deposit Insurance coverage Company (FDIC) bailed out SBNY and SVB’s uninsured depositors and made all depositors complete.

Since then, the banking contagion has unfold throughout the US and internationally, with monetary establishments like SVB UK and Credit score Suisse faltering. In line with a current report printed by Bloomberg, the final two weeks of March noticed the biggest contraction in lending on file after the collapses. The Federal Reserve’s knowledge on the topic solely goes again to 1973, and within the final two weeks of March 2023, virtually $105 billion was erased.

US Bank Lending Drops by Record $105 Billion in Two Weeks, Trillions Moving to Money Market Accounts, Elon Musk Warns ‘Trend Will Accelerate’

Alexandre Tanzi from Bloomberg explains that loans consisted of business, industrial, and actual property loans. Moreover, final week noticed $64.7 billion in industrial financial institution deposits faraway from monetary establishments, which marked the tenth straight weekly decline in deposits. One other signal of bother is the spike in Federal Dwelling Mortgage Financial institution (FHLB) bond issuance in March. Jack Farley, a journalist and macro researcher for Blockworks, shared a chart exhibiting FHLB bond issuance surging final month “to only below 1 / 4 trillion {dollars}.” Farley added:

That is over six occasions the post-GFC common for the month of March and it signifies banks’ scramble for money.

Furthermore, the favored Twitter account Wall Street Silver (WSS) shared a video of economist Peter St. Onge explaining {that a} vital quantity of financial institution deposits are transferring to cash market accounts. WSS tweeted, “Trillions of {dollars} are draining out of the banks… into cash market funds. That weakens the banks. Concern that the banks are in danger is driving this pattern and thus making the banks even weaker.” The economist’s video assertion and WSS’s tweet sparked a response from Twitter’s proprietor, Elon Musk. The Tesla government warned:

This pattern will speed up.

This isn’t the primary time Musk has cautioned the general public concerning the U.S. banking system, as he has criticized the U.S. Federal Reserve on a number of events. In November 2022, Musk warned that the U.S. would see a extreme recession and urged the Fed to slash the federal funds charge. In December 2022, the proprietor of Twitter stated {that a} recession would amplify if the Fed raised the rate of interest and the central financial institution elevated the speed. Musk additionally insisted in December that the Fed’s fast charge hikes would go down in historical past as one of many “most damaging ever.” After the three main U.S. banks failed in March, Musk lambasted the Fed’s knowledge latency and referred to as for an instantaneous drop in rates of interest.

Tags on this story

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What do you assume the long-term results of the current financial institution collapses and reduce in lending can be on the U.S. financial system? What do you consider Elon Musk’s warning? Share your ideas about this topic within the feedback part beneath.

Jamie Redman

Jamie Redman is the Information Lead at Bitcoin.com Information and a monetary tech journalist dwelling in Florida. Redman has been an energetic member of the cryptocurrency group since 2011. He has a ardour for Bitcoin, open-source code, and decentralized purposes. Since September 2015, Redman has written greater than 6,000 articles for Bitcoin.com Information concerning the disruptive protocols rising immediately.