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What is Causing the Banking Crisis?

As predicted, we’re in some very turbulent times here in the USA, but what exactly is causing the banking crisis?  Today I’ll break down the causes of the banking crisis in hopes of shedding more light on what’s going on on Wall Street and Beyond.  These are very trying times, and I feel like they are only going to get worse, so please take the time to understand what’s going on so you can be prepared for what’s ahead.

Speaking of being prepared, we’ve been urging investors to look into diversifying their portfolios.  In specific, the often-forgotten retirement portfolio.

Did you know you can safeguard your portfolio with precious metals like gold and silver? 

These metals SAVED the savvy investors who held them ahead of the 2008 meltdown, and a lot of people doubled their money (and net worth) by using this strategy.  Don’t let the turbulence scare you, hold gold.

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Causes of the Banking Crisis Explained

When the second largest bank failure in U.S. history happened just days ago, the financial system went bonkers.  I’m speaking of Silicon Valley Bank, which has led speculation that other banks could be in trouble as well.

While the last few years haven’t seen many FDIC banking failures, we should could be making up for it in 2023, but what is the cause of this banking collapse?

INFLATION.

That’s the simple answer, and the only answer.  With the rates being aggressively raised going back the last year in an effort to combat inflation, which has happened to an extent, its still way off the mark of the Fed target of just 2%.

With the interest rates skyrocketing in a very short time, the value of the bonds that Silicon Valley Bank were holding lost a lot of value, which led to the bank being insolvent.

If rate hikes continue, what do you think the outlook will be for banks as the years progress?

If you have any fear of the banking system collapsing, you should act now.  Gold already had a nice spike in price because of the Silicon Valley collapse, and it will only continue.  Robert Kiyosaki has predicted major moves in the gold and silver markets, and so far he’s been spot on.

Related Reading:  Should I Buy Gold or Silver?

On the other hand, if the rates aren’t hiked and they decide to put a pause on this whole game, the Federal Reserve’s battle against inflation could continue and we could see high prices that continue to chip away at our buying power.

We are in uncharted waters right now.

Depending on what side you are on, you’ll hear that we have a robust job market at the moment and stable economy, but as a devil’s advocate and person who doesn’t believe any of that, and will double down with Mike Rowe’s rant about how 7 million men chose not to work right now.

What Happens Now?

Fed Chair Jerome Powell told congress that it’ll be “bumpy” and that “inflation has a long way to go,” and even further, mentioned that he does expect rate increases to continue.

When that happens, you can expect more bank failures.  I’m not a proclamation guy, and I hate painting a doomsday approach, but that is where we are at right now.