Bread & Circuses

Rome's most iconic landmark is easily The Colosseum. The 50,000-seat amphitheater was a spectacular and historic epicenter of gladiator battles and raw human violence for over 400 years. Some estimates are that almost half a million human beings died needlessly at this carnival. As Rome was crumbling and the corruption was corroding the foundations of that society; the drama at The Colosseum kept the public distracted from the unfolding truth. The famous 2nd century Roman poet, Juvenal, famously wrote, "Give them bread and circuses."

How did that work out for the Romans? Interesting times are here once again. Over 70 banks failed last week. SVB and Signature were only two. There are 4,200 commercial banks in the USA with over $23.7 trillion in assets. Your money. Your mortgage. Your retirement.

The FDIC has about $129 billion on their balance sheet as of a few weeks ago; way before Silicon Valley Bank and it’s $174 billion in deposits evaporated on Monday. What is that all about? Jim Cramer and Howard Stern were both excited about this bank just a few weeks ago!? (At least most of SVB executives were able to cash out quick - and before the rest of the unsuspecting monkeys lost everything. I hear the weather in Hawaii today is a sunny 87 degrees.)

A simple calculation: 129B/$23.7T= .0054.

Hopefully, a 2nd person will show up and figure out how to feed the 5,000 with 3 loaves of bread this year?

A lot of people are once again pointing a lot of fingers. How will this unfolding circus affect the $41 trillion U.S. stock market? The $46 trillion bond market? Your 401k? IRA? Junior’s 529? Your favorite elite college endowment fund? That lump sum and annuity from granny’s generous inheritance she left you?

The banks only actually hold about 1.3% of your total deposits. Don’t believe it? Make a trip to your bank and try to pull out $10,000. I guess many will start to figure this out soon enough. Many already have this week.

If you go over to the Fed website you can see they claim about $21 trillion in M1+M2 money supply on their books. Interestingly, I see there is only $54 billion in actual money, coins, paper bills circulating out in our pockets, purses, wallets, piggy banks, and cash registers!? Makes you wonder how much cash people are stuffing under their mattresses? That seems oddly low to me!? But what do I know? Any economists who can educate me on why this is so low? Yes, I know that fraction reserve banking and the Money Multiplier Effect play a role in creating the velocity of money. But that humongous gap seems way too mysterious; it gives a new, modern look to Voodoo Economics.

In case you haven’t been following, our Federal Reserve printed over $16 trillion in the last 36 months. Fake money; monopoly money. That is a lot of printing presses in the basement. That sure is a lot of fake money created by a FIAT banking system that is mostly understood only by those pulling the strings in NYC, London, Brussels and Geneva. Not the little people like us. We are easily distracted by bread and circuses.

Main Street Joe and Jane always get raked over the coals. Every. Single. Time. 1929. 1987. 1999. 2008. 2020. Paint by numbers. Just in last 2-plus years, working families took a $1 trillion haircut in their household wealth - and the wealthiest 500 billionaires increased their personal wealth over $1.2 trillion. All at same time. Were you paying attention? Remember, 3 weeks to flatten the curve? Wear your mask and stand 6 feet apart. Small businesses must close - but big business must stay open. Liquor stores and Home Depot are essential. Your local gym and John’s Family Hardware store down on main are not. I love when the so-called elite pick winners and losers. That is really cool how they worked that magic trick! How we assess risk and make decisions as individuals and society is so flawed. Who we trust is wonky. All you need is a little dose of fear to send people hiding in their basements, turn on their friends and family, and make all of us compliant - and vulnerable. There is a price to pay for that. I think the bill is now due.

At least we have the excitement of March Madness right now to take our minds off the really important stuff. The gladiators and tigers will keep us entertained. In the worst case scenario, I'm sure we can watch our politicians and international bankers print another $16 trillion - and make sure everyone has plenty of monopoly money - and a chicken in every pot - to keep this circus going forever.