#CryptoMarketRebound What is really happening in the American banking system?


By the end of last December, the American central bank (Federal Reserve - Fed) has quietly injected more than $40 Billion into the US Banking System. 🤫💰
To put it simply, this is like an Emergency Inject given to the banking system. Let's look at two examples to make this easier to understand: 👇
💡 An example (The Pawn Shop Example) Imagine that you have land and gold worth crores (Assets). But you need 5 lakhs of cash for an emergency tonight. But you don't have any money at that time. What you do is pawn your gold (Repo), get the money, do the work, and pay the money the next day to save those goods.
Here, the banks temporarily gave the government Treasury Bonds they owned to the Fed and got Cash.
💡 An example of a saline solution (The Saline Example) Although a patient may appear to be fine on the surface, he may be very weak on the inside and his blood circulation may be impaired. At that time, doctors give him an emergency "saline" (liquidity) before the patient collapses.
What the Fed did was to give him a saline solution through money before the American banking system "collapsed".
1. What is this Liquidity Stress? 💸 Banks need liquidity if they do not have the money on hand for their daily transactions. By the end of December, there was a cash crunch among banks.
Although banks usually lend money to each other, at this time no one offered to lend to others (because there was no trust).
2. What are Repo Operations? 🔄 This money was provided through Repo (Repurchase Agreements).
On December 30 alone, $16 billion in Overnight Liquidity was provided. This is the biggest emergency intervention since the COVID crisis!
3. Is this a Red Flag? 🚩 The Fed says this is a "Normal Technical Process". But economic experts around the world say this is a Hidden Stress within the system. This is a big hint that there is a major weakness within the banking system.
4. What will happen next? (Future Outlook) 📉 The Fed has planned to buy another $220 Billion in Treasury Bonds within the next 12 months. This shows that although the American economy looks strong on the surface, it is still vulnerable on the inside.
Summary
Despite high interest rates, the Fed has had to pump money "quietly" to save the banking system from collapsing. This could have a big impact on the global market in
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