PREPARE: The 2023 Great Depression

TL;DR

The U.S. money supply is shrinking, First Republic Bank is on the brink of collapse, and the Yuan has overtaken the US dollar in cross-border transactions.

Transcript

but the big question is what happens next if another financial institution runs into trouble so the U.S money supply is now shrinking for the first time since the Great Depression all the way back in the 1930s and the internet is buzzing all about it and while all of that is happening another major bank is on the brink of collapse First Republic Ba... Read More

Key Insights

• 🖤 First Republic Bank's crisis highlights the potential risks in the banking industry, with withdrawals and lack of confidence triggering a need for intervention from other financial institutions.
• 💰 The rise of the Yuan in cross-border transactions signals China's efforts to challenge the dominance of the US dollar, but the US dollar still remains the primary global reserve currency.
• 🤑 The shrinking of the US money supply is a deliberate action by the government to curb inflation and drain excessive liquidity from the economy.
• 🥺 Investing in broad market ETFs provides diversification and mitigates the risk of individual stock predictions, leading to more reliable long-term investment returns.

Questions & Answers

Q: Why is First Republic Bank on the brink of collapse?

First Republic Bank is facing a crisis due to massive withdrawals by depositors following the collapse of Silicon Valley Bank and Signature Bank. This has eroded confidence in the bank and led to a sharp decline in its stock price.

Q: Why did 11 major US banks pump $30 billion into First Republic Bank?

The 11 major US banks stepped in to stabilize First Republic Bank and prevent a collapse that could have systemic implications for the banking industry. They provided a lifeline to restore confidence in the bank and avoid a domino effect.

Q: How significant is the rise of the Yuan in cross-border transactions?

While the Yuan's rise in cross-border transactions is noteworthy, it still represents a small percentage of the global commerce compared to the US dollar. The US dollar remains the dominant world reserve currency, although the shift towards the Yuan is something to monitor.

Q: What is causing the shrinking of the US money supply?

The US money supply is shrinking as the government aims to reduce liquidity in the economy. This is a normal reaction during post-recession periods when excessive liquidity can lead to inflation. The reduction of money supply aims to curb inflationary pressures.

Summary & Key Takeaways

• First Republic Bank, the 14th largest bank in the US, has received a $30 billion lifeline from 11 major US banks to stabilize the bank after depositors withdrew over $100 billion.

• The stock price of First Republic Bank has plummeted by over 50% in one week due to massive withdrawals and lack of confidence.

• The Yuan has become the most used currency in cross-border transactions, surpassing the US dollar for the first time in history.