The Funniest Post You’ll Ever Read About Bank Failures And Yachts

“A major one.” – Fight Club

What did Kim call his yacht? His dictator ship.

Last March, Silicon Valley Bank® failed. In a big way. Because the people who deposited money in the bank own things like yachts and senators, well, they escaped with hardly a haircut. The Federal Deposit Insurance Corporation® (FDIC™) normally ensures deposits for $250,000 per account holder. In this case, they decided, nah, what the heck, we’ll make sure that Roku® and Oprah Winfrey and Prince Harry don’t lose a dime.

Ironically, today the Internal Revenue Service sued the FDIC© for $1.45 billion in back taxes they say that Silicon Valley Bank™ owed when the FDIC© took it over. Sure, it sounds like on part of the government is suing another part of the government for play money made up by the (non-federal) Fed™ but the FDIC™ is supposedly independent and gets its money from the member banks.

Which are members of the Fed™. Which prints the cash.

If this sounds as incestuous as a Hapsburg family stump, well, it is. And of course I’m going to go with a fresh meme about the Hapsburgs, because that’s what all of the cool kids are doing today.

A Hapsburg walks into a bar, the bartender says, “Why the long face?” The prince says, “Generations of inbreeding.”

The root cause of the Silicon Valley Bank™ failure is that they lent money for long periods at low interest rates. When interest rates go up, those loans aren’t worth a lot, at least to the bank. Right now, my mortgage has a lower interest rate than I’m getting in checking.

Silicon Valley Bank™ looked at all the crappy loans they had, and did the math, and found out that they were worth less than zero. Even worse, their bigger depositors heard (because depositors who own senators seem to get advance notice) and started to pull their money out.

Since those folks had friends, they told them. Soon enough, everyone wanted one thing – they wanted their money out of Silicon Valley Bank™. Rational people realized that if this was a problem at Silicon Valley Bank©, it was a problem everywhere.

Silicone and silicon – electrical engineers know the difference – no one trusts them around silicone.

In a thought that gives central bankers and senators cold sweats (after the previous night’s booze wears off) is the idea that people lose faith in the banking system. Oddly, this wouldn’t be a problem if we used money made out of gold and silver, but since ours is just as much a fantasy as thinking that diversity enriches us all.

So, there’s a problem that’s impacting literally every bank. Some big ones have failed, but thankfully Duchess Markle still has her cash so she can get enough publicity to hide from commoners like me. What’s the solution?

First, pay off everyone so no one is scared and Oprah doesn’t have to fly commercial with mere mortals. Second, flood the system with money. If a bank needs cash? Wheelbarrows of it?

Give it to them.

Thankfully Congress took a break from sending your tax dollars to Ukraine to bail out Oprah.

Last year, banks were paying 0.10% or so for crappy checking accounts. This summer, rates started shooting up, so I snuggled into some CDs that paid a lot more than my mortgage cost. Then, last month, I got a call from my bank where I set up the CDs.

“Mr. Wilder? You have money in other banks, right? If you deposit (a few thousand) dollars from accounts outside of your accounts with us into savings, I can give you a 4.5% rate on checking and savings.”

What????

If there’s one thing I know about banking, is that bankers are not generous except to themselves, senators, and Oprah.

I check with him, drove to the nearest branch of Major Bank™ in Mt. Pilot, and tossed a few thousand in. Could I take it out later?

Sure!

I am informed this is funny because horses often live in stables, so this would be a violation of California’s work safety laws.

I started wondering about this, but soon enough came up with the answer: when I make a deposit in the bank, I’m making a loan to the bank. And if they’re offering me nearly 5% for just parking cash at their place, that means . . .

I’m their best alternative for a loan. Me. John Wilder. Enough so they paid a dude to call me and ask.

Yup, it’s just that simple. And they called me to ask me to make a loan, and offered to pay me over four times what I was making on my cash to make that loan. Reading a bit further, it turns out the way that the Fed™ shoved money down the collective throats of the banks was through the Bank Term Funding Program (BTFP).

BTFP loaned money to the banks, and the banks deposited the money at the Fed© to make a profit on the difference.

Yes, the Fed© created the BTFP, loaned the money to the banks who then deposited the money . . . at the Fed™. I’m not making this up. As of March 11, 2024, the Fed© will no longer be making more BTFP loans at those sweetheart rates. All new loans would be made at the same rate the bank gets paid by the Fed©. The gravy train, or at least this gravy train, is over.

That’s what the Fed© said in January, 2024.

When did I get the phone call wanting to borrow a few bucks from Major Bank?

January, 2024.

Since when do I believe in coincidences? And it was weird, it wasn’t a lot of money that I needed to deposit, but I think they were looking to get bigger players than tiny John Wilder.

But at least they’re not insufferable idiots . . . oh, too soon.

And that’s the rub. If banks are looking to borrow cash from me, how bad are their balance sheets?

Dang, I’m worried! Will Prince Harry have enough money to travel the world for 45-minute meetings with his father? Will Oprah be able to afford more caviar?

And, maybe I should take up loan sharking. Maybe I can buy my own yacht, bigger than Prince Harry’s and I’ll sail past him, and look down on him, and try to give Harry that condescending look that appears to be his Resting Prince Face.

And I’ll write a rock song about it.

I’ll call it Smirk on the Water.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

33 thoughts on “The Funniest Post You’ll Ever Read About Bank Failures And Yachts”

  1. “…..they were worth less than zero”

    I had no idea that Bret Easton Ellis banked there.

    Seriously, a bank holiday might not be too far off, changing Scott Adams maxim to “Get your $$$ out of banks now”.

  3. Since 2020, all the US Government debt sold at auction to fund this crazy Biden-era party of COVID stimmies and student debt forgiveness and Ukraine war aid and all the rest had to be bought by somebody.

    It wasn’t China. They DUMPED $0.25 trillion and are continuing to dump more to fund their ongoing gold-buying spree in prep for WW3.

    https://fingfx.thomsonreuters.com/gfx/mkt/znvnbxekjvl/ChinaUST.jpg

    The Fed bought $3.5 TRILLION of it outright (and have sold a trillion of it back into the market via “quantitative tightening” or QT). But no problem for them, they’ve got a magic printing press that prints dollars on demand – and inflation as well.

    https://fred.stlouisfed.org/series/TREAST

    And the commercial banks did their share since 2020 and bought $1.5 trillion more with money-on-deposit (ie, YOUR mortgage, car and credit card payments) because they DON’T have a magic printing press. And promptly puked back almost a half-trillion of it back into the markets when the Fed raised interest rates to fight the very inflation the Fed themselves had caused.

    https://fred.stlouisfed.org/series/USGSEC

    Now China continues to dump US Treasury paper that will become worthless to them when Taiwan goes hot, the commercial banks can digest no more US Treasury paper without collapsing, and Congress/The Prez continue to spend on junk like they’ve got some kind of insane Temu app.

    We are in financial overtime with collapse on the scoreboard.

      1. 8.9 Trillion treasuries come due first quarter of this year. Average 1.7% interest that debt will need to be resold at 4.4% average…and our manufacturing center in china is not buying

        The fed and the banks are both underwater on everything. The real news is bad money getting worse and we manufacture nothing. Someone needs to order the boots for our army to fight our trading “partner”.

  4. Someone we all know said it’s a “bummer for Vlad that the US Dollar is worth more than the Ruble”.

    Funny how you go broke “Slowly then all at once” Hemmingway in the Sun also rises.

    At least the Russians still allow their folks to mine metals, make stuff and drill for oil. Gives them something other nations are willing to buy.

    Or as some fellow likes to say about inconvenient facts like that. “Self Goal” as in we screwed ourselves.

    Back in the 70’s we MADE STUFF, now we make DEBT and expect by the might of our Military others accept it as “Real Money”.

    Afghanistan, the “Stalemate in Ukraine” propaganda will replace the Russia is LOSING and Ukraine will WIN with the undying aid of America and NATO support stuff. And soon enough the pitiful Houthis will drive the “Mighty US Navy” from escorting Israeli shipping from the area. When your on the ground doesn’t fit, just move the goal posts and declare “Mission Accomplished”.

    I always was interested in the Fall of Rome; I just didn’t want to be a living witness to it.

    2. At least the Russians still allow their folks to mine metals, make stuff and drill for oil. Gives them something other nations are willing to buy.

      I guess it’s trajectory, yes?

      Russia has less than does the U.S. and all the same social problems. Possibly even worse: depends who you talk to.

      The funny thing is that the folks at the top are admitting that all the bad stuff is, in fact, bad: Muslims, foreign immigration, feminism, single moms, piss-poor birthrate, all the Pride & other effingy cloud-world stuff. Also the good stuff: National identity, Christianity, manliness, families, et al., are good.

      Is Russia really trying to change course from the top and possibly bottom, or at least a few different sides that aren’t the top? Will it make a difference? Not sure where I’d even begin to look.

  7. Kim Jong Un . . . you are such a scamp! You jolly elf you. You get on my nerves and I’ll send Hillary back over there.

    Speaking of the National Hag, ‘For rebellion is as the sin of witchcraft . . . ‘ (1 Samuel 15:23)

    Oh look! My, however did this happen? I do believe these matters done gone global. They split the atom, then the male and the female. Same operation, really.

    https://www.theburningplatform.com/2024/02/14/the-gender-divide-is-global/

  8. I’m guessing my ability hunt, and fish, will be important skills in the near future. I’ll trade my meat for gold and hope someone has some use for gold before I’m gone. If not, they’ll have to find it, and The Discovery Channel will have something to create a show.

    Jess

  9. John – So my first layoff was in some way likely triggered by the Silicon Valley Bank failure. I had not idea any of the company’s capital was there (nor would I; who tells serfs where the Treasury is), until we got an e-mail from corporate management assuring us that we would be able to continue operations even though our money was there (this, of course, after the deposits were backed up). Right after that, we got a letter from our landlord noting they needed a new letter of credit as our current one backing the lease was from Silicon Valley Bank….

    As I recall, we were notified within three weeks of layoffs. Suddenly, the capital markets looked a lot more risky.

  10. This is what happens when you replace an economy with a financial system.
    It’s related to how the justice system was replaced by a legal system.

    1. Exactly. Perfectly said. I’d just as soon replace both the justice and legal system with Kyle Rittenhouse.

  11. it’s a tale as old as bailouts: if the average person managed their money as badly as big banks, they wouldn’t have a penny to their name. But then the same applies to an even greater extent in comparison between central and private banks, says MacLeod, with the former having basically zero accountability.

    Liquidity is another thing they’re lacking, to summarize MacLeod’s lengthy and well-presented overview of the banking sector. Most interestingly, perhaps, MacLeod says that central banks aren’t so much buying gold as they are getting rid of paper currency. We’ve all heard of this interpreted as diversification or de-dollarization. Maybe that’s just a polite way of talking around the issue. In reality, central banks are using paper money to buy gold – and not just foreign currencies, but their own as well.

    Why would they do that? MacLeod says we only need to look to gold’s fundamentals for an answer. By 2025, the U.S. federal government will owe some $40 trillion in debt, which (if you’ll forgive the pun) there’s absolutely zero interest in ever paying off. Politicians might talk about balancing the budget, they might hand-wave about paying down the debt. Instead of listening to what they say, watch what they do. Find any elected government official willing to spend less on his own constituents – I challenge you.

    I just don’t think the federal government is able to pay down its debt. Not without truly massive changes to “business as usual.” Interest payments already set us back over $1 trillion in the fourth quarter of 2023! As we’ve noted many times, inflation is the preferred method of “paying off” debt a government owes in its own currency.

    To this end, MacLeod notes that governments are printing trillions in currency annually to prop up their economies with limited results – other than the certainty of inflation and higher interest rates down the line. As interest rates rise, money-printing will accelerate to match, resulting in even higher inflation to offset the debt and relieve pressure. (And to think, we’re yet to experience the effects of a single rate cut despite the current high rates!)

    Despite gold’s price rising over the last three years, MacLeod believes we aren’t really seeing a bull market yet. He says that interest in gold is disappointing, with nearly every investor, public and private, severely underweight in gold. MacLeod estimates that, of the $150 trillion in global savings, less than 1% is currently in gold.

    Nevermind prices: when these portfolios adjust to 5%, 10% or even what MacLeod finds a more reasonable 15%, where is the gold going to come from? Merely adjusting to 2% would require 23,000 tons of physical gold! That’s 10% of all the gold mined in human history…

    We already know what a 1,000 ton annual purchase for two consecutive years does for gold. We’ve seen it over the past two years with the official sector. Since central banks aren’t likely to stop these purchases, MacLeod leaves us wondering just how soon the rest of the world will catch on.

    When $150 trillion in global savings begins to diversify with gold, just how fast and how far will gold’s price rise?

    Will gold ever drop below $2,000/oz again? We’ve taken care to note how bearish outlooks have been coming in with increasingly lofty figures. Here is a quote from the research report:

    The metal has been trading between $2,000 and $2,050, with the market adjusting to the Federal Reserve’s hawkish stance and delaying rate cuts until June 2024.

    In other words, $2,000 to $2,050 are now “business as usual” targets. We find this to be a triumph of its own for gold prices, but of course, there is a whole lot more growth on the horizon. Goldman Sachs’ analysts are maintaining their $2,175 12-month target, citing both economic and geopolitical reasons for the forecast.

  12. Banking is a racket run by politicians and the power elite. It’s designed to transfer wealth from us little people to the people running things. The rules apply only to us. Not to the banks or the people running them. And cash in the bank is no longer YOUR money. It’s theirs. And if they decide to keep that money they will. And there won’t be a damn thing you can do about it…at least not legala

    1. Banking is now – especially since money is a fiction. When you start writing fiction, they start doing anything to keep the money magic going.

  13. Since the start of hippyism, a popular meme is that corporations own Senators and/or have other means to manipulate the law.
    The reality is the opposite. When I make the laws you live by, you don’t have enough money to buy me. You can buy influence, but that’s it.
    Imagine I’m Nancy P. I decide my target is…oh, let’s see…hog farming. Billions of dollars there. I announce the formation of a committee to look into abuse of whatever, mismanagement of blahblah, the list of thought crimes is endless. Now the hog industry does my bidding, or they get new laws which crush the non-compliant amongst them, and keep the survivors in line.
    There’s just not enough money in business. Any business. Not since digital tax currency replaced commerce money, as you point out in the banking discussion.
    The wealthiest counties are contiguououous(sp?) to Washington, D.C.

    1. I like that theory, but can’t get there – a politician would be all-in to pander to voters to keep their job, yet they vote against the majority of their constituents over 70% of the time. Not my stats.

      They are owned. Either by business, or by Evil.

  14. WDE: WordPress is doing a variant of the thing that LiveJournal used to do. You’d type a comment, hit “send” and away it would go… then never appear. So while I have been away for about 2 weeks, since I usually read your column on “Wilder Time’ sitting out under my settin’ tree or comfy armchair after work, comments were broken.

    I think it’s because I’m not logged in, so this’ll be the test.

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