The US Treasury, FDIC, and the Fed came together quickly with the blessing of the White House to jam a finger into the hole in the dyke that was the Silicon Valley Bank (SVB) leak. They did not even get through the weekend before another bank, Signature Bank with $89 bln in deposits also collapsed from some of the same issues as SVB. A quarter of Signature Banks deposits reportedly came from cryptocurrency. The Banking industry is finding out that cryptocurrency is not real money so should not be considered to be actual dollars on deposit. Every dollar on deposit that is in cryptocurrency is essentially just a loan on a dubious asset that bears its own risk parameter. If a real bank is lending real money against fake cryptocurrency deposits, then they are undercapitalized. The whole cryptocurrency thing is a fool’s illusion and it can now be seen how even banks have become party to the fools. How can that be? It can be. The Fed is making it clear that it doesn’t want cryptocurrency held in banks. The action taken by the government Sunday to essentially insure the uninsured FDIC deposits in SVB and Signature, were unprecedented….
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