Investing: Why banks keep failing in this environment

Summary notes:

The current financial system is a fractional reserve banking system, which means banks lend out more money than it has in its reserves. If customers withdraw their money all at once, banks cannot cover the amount owed.

With fears of financial instability in the banking system, wealthy people (who are aware of the banking system) are moving their money to too-big-to-fail institutions to protect it along with a slow drain of money from the banking system to alternative assets such as bitcoin, stocks, real estate, and gold. 

Well known economic experts have been warning of a potential banking crisis, and now that it is here, people are scrambling to figure out what to do with their money long term to counteract the potential inflation that’s speculated will be needed to fix the current system. 

Timestamps

0:01:27 Overview of Fractional Reserve Banking System and Bank Failures

0:03:43 Analysis of the Current Banking System and the Response from Wealthy Investors

0:07:10 The Impact of Low Interest Rates and Money Creation on Investment Strategies

 

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Phillip Washington, Jr. is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.