Bankless Ben Hunt says, “Cut the BS! The Banks Are Solvent!"
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Mar 25, 2023 Ben Hunt, an investor and creator of Epsilon Theory, argues passionately against the doom-and-gloom narrative surrounding bank insolvency. He challenges popular beliefs that banks are failing, asserting instead that they are fundamentally stable. Hunt critiques the Federal Reserve's approach while discussing the implications of cryptocurrency in traditional finance. He emphasizes the importance of civil discourse and proposes that the focus should be on reforming the system rather than succumbing to fear, making a compelling case for the resilience of financial institutions.
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Reader Concerns
- Ben Hunt received emails from readers expressing concerns about bank solvency.
- Some considered removing money from major banks like Wells Fargo due to fear.
Insolvency vs. Illiquidity
- Bank insolvency means assets are permanently impaired, not just temporarily illiquid.
- Current bank issues are liquidity-driven, not driven by impaired assets like in 2008.
BTFP is Not QE
- The Fed's bank term financing program provides short-term loans, not permanent money printing.
- This addresses liquidity issues, unlike QE, which expands the Fed's balance sheet.