Well here we are again looking at failures in the banking system and this time its not just here but also international locations.
So, is this something that the FED may have contributed to in the last year of raising interest rates?
8 yes, Eight, interest rate hikes by the FED in the last 12 months.
Which sadly did not do anything to reduce or even slow down inflation.
Recent bank failures in part were due to rising interest rates which the FED continued even after warnings by analysts were sounded indicating severe issues would come about if the FED did not stop raising interest rates without any real “reason” to do so.
Of course theoretically speaking the FED thought that what they were trying to do would eventually work.
Sadly this is never a reason why you do something .
You could install a screen door on a submarine but why would you?
The FED seem to have this idea that they can single handedly stop inflation by just raising interest rates even though hundreds of analysts believed this would not work the FED still continued to raise interest rates over and over and over again and yes, they did it at least 8 times.
When something fails to work you stop and you change your strategy and yes you look at other ways to try to manage issues.
But as we know the FED did not do this and it is even possible that they still want to continue down the wrong path.
Some have suggested that congress may have to step into the issue to manage the FED if they do not start to manage differently because there is a point where damage might become an issue that congress could decide to deal with.
Of course that is very unlikely unless some of the banks being hurt by excessive interest rates happen to hit close to home for some congressman and senators.
That would be ironic in the extreme…
One thing seems clear the interest rate hikes were not helping the situation and in fact it was creating a great deal of pain for the stock market, banking, home mortgages, Main Street and Wall Street.
Now that another report of a bank in trouble has surfaced the stock market appears to be again headed down.
Credit Suisse appears to have some exposure over the last few weeks and in fact could have some serious issues in the future.
This is what happens when you try to do the impossible with the impractical.
Raising the interest rates too many times is not the answer and continuing to raise the price of doing business is not going to help.
There could be more pain in the near future as some banks may face contagion fear and loathing but not in Vegas.