You have undoubtedly heard that two major American banks have collapsed with Silicon Valley Bank and Signature Bank. To prevent contagion to the rest of the economy, the US government has decided to protect the customers of the banks. President Joe Biden says that taxpayers will not feel any of this.
Our banking system is secure
In a message on March 12, Biden said that the US banking system is safe and that everyone should maintain confidence. You actually know that there is more going on when people start shouting things like that. If you have to shout very loudly that something is the case, it usually isn’t.
In the end, we also have to see whether it stays with Silicon Valley Bank and Signature Bank. Those are the first two big names to fall as a result of the Federal Reserve’s interest rate hikes, but it may well be that there are problems at other major banks that we don’t know about yet.
In that respect, we are entering a hugely exciting period for the financial system and by extension for Bitcoin and the rest of the crypto industry. It is also questionable whether Biden’s words about the taxpayer are correct.
Taxpayer not hit?
Somehow it is strange that the US government guarantees all kinds of assets of customers of large banks and that the taxpayer would not feel anything about this. That money has to come from somewhere. Even if they create it out of thin air and don’t get it out of tax pots, it still costs taxpayers money in the form of extra inflation.
In that respect, Joe Biden’s statements seem mainly for the proverbial stage and are intended to keep the general public quiet. On Twitter, there were also some people who do not fully believe Biden’s story.
“Everything you do or touch costs taxpayers money!” Joe Billie writes under Biden’s message. Indeed, that seems to be closer to the truth than Biden’s story itself. In principle, of course, a government cannot take action without costing the population money.
