Credit Suisse Passed Fed's Stress Test, Collapsed Months Later

GM and brrr.

We found a fascinating report from a research org called The Peterson Institute for International Economics (PIIE) today. Citing the results from and the criteria the Fed uses for its annual Stress Test of the banking system, PIIE points out that since 2015, the Fed has only simulated the impact of LOWER interest rates on the banking system during the stress test simulation - and never HIGHER interest rates.

The failed Credit Suisse passed the Fed’s test as recently as 9 months ago.

This implicates the Fed as either

a) totally blindsided - by the possibility of high inflation and by implications of its own policy

b) willful liars - in attempt to prevent panic, they kept the risks hidden from the public

Either way, the Fed is a very poorly run institution and is destroying our currency.

That’s why we own crypto - the US will need to inflate away its $31T in debt.

Here’s what we brrr’d today:

• The Fed Got Blindsided

• Gold’s Perfect Storm

The Fed Blindsided By Impact of High Rates

• Dodd-Frank requires the Fed to predict potential macroeconomic scenarios and simulate the effects on the banking system - this is called a Stress Test.

• The Stress Tests used by the Fed has been criticized for its choice of scenarios, particularly its assumption of low interest rates as a negative scenario, and never simulating high interest rates.

• Not since 2014 has The Fed included a negative scenario that included high interest rates - insinuating that the Fed was completely blindsided by its own rate hiking strategy this year.

• This regulatory action has consistently failed to identify this substantial risk of high interest rates and provide consumer protections and awareness

• Credit Suisse - which failed and sold in a firesale last week - passed the Fed’s 2023 stress test with flying colors.

  PIIE

Gold’s Perfect Storm

• Gold prices have risen significantly following recent economic crises. It’s up 7.5% on the month while the S&P 500 has been flat.

• The rise in gold prices is due to the market's perception of global financial instability, as investors are seeking safe-haven assets that can be stored safely at home with no counterparty risk.

• The recent string of bank failures has made gold an attractive investment, with the price of Bitcoin and Ether also rising along with gold.

• Jerome Powell's comments on potential future actions of the Fed following the recent Federal Open Meeting Committee meeting have also contributed to the rise in gold prices, with investors turning to gold as stocks tumbled.

• Technical traders see a long-term “Cup and Handle” pattern forming on the gold price chart - one of the strongest bullish indicators in the book.

  Yahoo Finance

AI ART OF THE DAY

Jay Powell feeling guilty giving out trophies to losers?

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