{"id":19649,"date":"2023-04-09T15:37:54","date_gmt":"2023-04-09T15:37:54","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/us-bank-lending-drops-by-record-105-billion-in-two-weeks-trillions-moving-to-money-market-accounts-elon-musk-warns-trend-will-accelerate-economics-bitcoin-news\/"},"modified":"2023-04-09T15:37:54","modified_gmt":"2023-04-09T15:37:54","slug":"us-bank-lending-drops-by-record-105-billion-in-two-weeks-trillions-moving-to-money-market-accounts-elon-musk-warns-trend-will-accelerate-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/us-bank-lending-drops-by-record-105-billion-in-two-weeks-trillions-moving-to-money-market-accounts-elon-musk-warns-trend-will-accelerate-economics-bitcoin-news\/","title":{"rendered":"US Bank Lending Drops by Record $105 Billion in Two Weeks, Trillions Moving to Money Market Accounts, Elon Musk Warns \u2018Trend Will Accelerate\u2019 \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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The banking industry in the United States is still struggling after the collapse of three major banks. According to statistics, bank lending in the U.S. has dropped by close to $105 billion in the last two weeks of March, which is the largest decline on record. Additionally, Elon Musk, a Tesla executive and owner of Twitter, recently commented on trillions of dollars being withdrawn from banks into money market funds, and he insists that the \u201ctrend will accelerate.\u201d<\/strong><\/p>\n

Statistics Still Show Glaring Signs of U.S. Bank Weaknesses; Musk Issues Warning<\/h2>\n

There are still plenty of signs showing that the U.S. banking system is feeling the aftermath of several high-profile bank collapses. During the first week of March, Silvergate Bank<\/a>, Silicon Valley Bank<\/a> (SVB), and Signature Bank<\/a> (SBNY) closed down operations. Both SVB and SBNY were placed under government control. The U.S. Federal Reserve, Treasury, and Federal Deposit Insurance Corporation (FDIC) bailed out SBNY and SVB\u2019s uninsured depositors and made all depositors whole.<\/p>\n

Since then, the banking contagion has spread across the United States and internationally, with financial institutions like SVB UK<\/a> and Credit Suisse<\/a> faltering. According to a recent report<\/a> published by Bloomberg, the last two weeks of March saw the largest contraction in lending on record after the collapses. The Federal Reserve\u2019s data on the subject only goes back to 1973, and in the last two weeks of March 2023, almost $105 billion was erased.<\/p>\n

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Alexandre Tanzi from Bloomberg explains that loans consisted of industrial, commercial, and real estate loans. Furthermore, last week saw $64.7 billion in commercial bank deposits removed from financial institutions, which marked the 10th straight weekly decline in deposits. Another sign of trouble is the spike in Federal Home Loan Bank (FHLB) bond issuance in March. Jack Farley, a journalist and macro researcher for Blockworks, shared a chart<\/a> showing FHLB bond issuance surging last month \u201cto just under a quarter trillion dollars.\u201d Farley added:<\/p>\n

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This is over six times the post-GFC average for the month of March and it indicates banks\u2019 scramble for cash.<\/p>\n<\/blockquote>\n

Moreover, the popular Twitter account Wall Street Silver (WSS)<\/a> shared a video of economist Peter St. Onge<\/a> explaining that a significant amount of bank deposits are moving to money market accounts. WSS tweeted<\/a>, \u201cTrillions of dollars are draining out of the banks\u2026 into money market funds. That weakens the banks. Fear that the banks are at risk is driving this trend and thus making the banks even weaker.\u201d The economist\u2019s video statement and WSS\u2019s tweet sparked a response from Twitter\u2019s owner, Elon Musk. The Tesla executive warned<\/a>:<\/p>\n

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This trend will accelerate.<\/p>\n<\/blockquote>\n

This is not the first time Musk has cautioned the public about the U.S. banking system, as he has criticized the U.S. Federal Reserve on several occasions. In November 2022, Musk warned<\/a> that the U.S. would see a severe recession and urged the Fed to slash the federal funds rate. In December 2022, the owner of Twitter said<\/a> that a recession would amplify if the Fed raised the interest rate and the central bank increased the rate. Musk also insisted<\/a> in December that the Fed\u2019s rapid rate hikes would go down in history as one of the \u201cmost damaging ever.\u201d After the three major U.S. banks failed in March, Musk lambasted<\/a> the Fed\u2019s data latency and called for an immediate drop in interest rates.<\/p>\n

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\nTags in this story
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aftermath<\/a>, Bailout<\/a>, Banking Industry<\/a>, Bloomberg<\/a>, Cash<\/a>, collapse<\/a>, commercial bank deposits<\/a>, credit suisse<\/a>, decline<\/a>, Economy<\/a>, Elon Musk<\/a>, Federal Deposit Insurance Corporation<\/a>, Federal Home Loan Bank<\/a>, Federal Reserve<\/a>, FHLB bond issuance<\/a>, Financial Institutions<\/a>, government control<\/a>, lending<\/a>, major banks<\/a>, money market funds<\/a>, Recession<\/a>, record<\/a>, Signature Bank<\/a>, Silicon Valley Bank<\/a>, Silvergate Bank<\/a>, Statistics<\/a>, Tesla<\/a>, Treasury<\/a>, trend<\/a>, trillions<\/a>, Twitter<\/a>, United States<\/a><\/div>\n<\/div>\n

What do you think the long-term effects of the recent bank collapses and decrease in lending will be on the U.S. economy? What do you think about Elon Musk\u2019s warning? Share your thoughts about this subject in the comments section below.<\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons, Bloomberg Chart, <\/em><\/p>\n

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Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

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