“But this time, notice that the Fed is not helping"
40:33 The Fed is increasing rates, which as we saw is hurting asset values, and the same time
40:40 the Fed is selling assets.
40:45 And so it is withdrawing liquidity. So we are most certainly here in uncharted territory.
40:51 The Fed is not helping the situation. So you can fully expect this line to keep going; the panic is going to continue.
40:59 We are deep into uncharted territory. I’m not sure how this story ends. . . .
The Fed is harming, it is hurting the banks. it is hurting the system.
41:39 It’s making things worse now, whereas back here it at least tried to help. It cut rates.
41:45 When it saw emergency borrowing, it cut rates. cut rates, it cut rates.
41:50 And it increased asset purchases here, increased asset purchases here; added liquidity.
41:56 It’s not doing that anymore. Okay? But what we are looking at here—this is the end of manufacturing really, for the most
42:04 part here. . . .
42:48 And we’re into uncharted territory, like I say. So to summarize all this, the banks are all bankrupt right now.
42:57 Well, not all of them. But the system as a whole, the U.S. banking system right now, it is bankrupt.
43:03 It is deeply bankrupt. The panic borrowing has begun. You saw that with the huge FHLB advances, and you see both of those things going on
43:13 in the Quarterly Banking Profile. In other words, you see the bankruptcy of the entire banking system, and you see the
43:20 panic borrowing going on right now. And rather than helping the situation, as I point out, rather than helping the system
43:28 with rate cuts—it actually can’t cut rates anymore, at least when this started, because the rates are zero.
43:34 But rather than leave the rates at zero, and just leave investment values where they are,
43:40 the Fed is increasing rates. It is increasing rates, and like I say, it is selling assets, which has the effect of
43:46 pulling liquidity from the system. “