On today’s show we are taking a look at the so-called liquidity crunch to understand why it is happening. Is it just rumour? Is the lack of liquidity real?
On today’s show we have concrete proof as to why the credit markets are seizing up.
A few months ago it was simply a thesis that the regional banks were losing deposits to the major banks. These medium sized banks were under pressure ever since the failure of Silicon Valley Bank.
The outflow of capital has been largely to the benefit of the larger banks like JP Morgan Chase, Wells Fargo and Bank of America.
But the outflow has not been a zero sum game. A recent review of the Federal Reserve Bank of St. Louis data set shows that nearly $1T in deposits have left the banking system entirely since June of 2022. The bulk of that decline was in the last 8 weeks. Back in June there was 18.1T in deposits in US banks. Today, that number is down to 17.1T. Somewhere along the way, 1T just vanished from the banking system.
The question is, where did it go?
Host: Victor Menasce