Schiff Gold: Americans Will Pay for These Bank Bailouts
History may not repeat… but it certainly rhymes. The banking system is in turmoil again, and it’s clear that many are thinking back to the collapse of the financial sector back in 2008.
Regulators have been quick to act to shore up the banking system so far this year. And many politicians and pundits have declared that our banking system is safe. While we may see some further turmoil ahead, many are claiming that the issue is contained.
Contained or not, however, is the fact that taxpayers will be on the hook for bailing out the banks… again. Instead of the housing market going gangbusters, we’re now faced with the consequences of interest rates being too low for too long.
Years of zero percent interest led to a boom in a number of sectors. That’s starting to reverse with interest rates moving higher. One epicenter was technology. Early-stage ideas boomed thanks to support from cheap capital.
But now that’s shifting. And the bank failures so far have been at those that leaned heavily towards servicing new technology ideas.
Meanwhile, the simplest solution to save the banking sector is with a bailout. That means more money flooding into the economy, at a time when inflation is still high. The end result? Continued high inflation combined with a slowing economy – or stagflation.