Bankless Jim Bianco on the Health of the Global Financial System
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Mar 29, 2023 
Jim Bianco, Head of Bianco Research, returns with sharp insights on the tumultuous state of the global financial system. He delves into recent banking insolvencies like Silvergate and Silicon Valley Bank, analyzing how these issues could boost Bitcoin's appeal during crises. Bianco expertly navigates the implications of rising interest rates on banks and consumer behavior, and the shifting dynamics of commercial real estate. He also discusses the Fed's role in maintaining liquidity and what the future could hold for traditional finance and crypto.
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Liquidity Crisis vs. Solvency Crisis
- The current banking crisis is primarily a liquidity crisis, not a solvency one.
- People are withdrawing money due to low interest rates offered by banks, seeking higher yields elsewhere.
Balance Sheet Expansion
- The Fed's balance sheet expansion is due to increased lending, not quantitative easing (QE).
- This lending is collateralized, unlike the money printing seen in 2020 or 2008.
Historic Deposit Drawdown
- The largest drawdown in bank deposits in 43 years occurred before Silicon Valley Bank's collapse.
- This drawdown was driven by depositors seeking higher yields, similar to DeFi 1.0 yield farming.