Is my money safe in the bank?
To understand if your money will be safe in the bank, let’s start with analysing with US Debt situation.
Just in the course of the one year, the US Debt went from 31 Trillion to 33 Trillion.
Debt to GDP ratio in the US is at 98%, which serves as a stability indicator and which makes the payoff of debt unsustainable. If you look at who holds the debt in the US, 30% of debt is foreign and 70% is domestic.
Run on the bank would happen as soon as foreign investors, like Japan and China do not feel that they will get paid off by the US and will sell off the debt holding. Banks go down with a spike request for levered cash.
3 ways to solve the US Debt confidence:
1. To make significant cuts to programs like Medicare, Military, etc.
2. To raise taxes.
3. To grow the economy at a faster pace than debt growth.
One of my expectation for 2024 is for Feds to cut rates later this year. It will help to reduce the interest paid on the debt with increasing Core CPI inflation numbers. Liquidity crunch will be felt by all business owners, with many bankruptcies. No major government programs that would increase the debt ceiling will be signed into law.
With all of the above, 2024 does not look that pretty at all, so fasten your seat belts for a shaky ride.
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