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How Surging Bank Deposits May Collapse the U.S. Dollar

How Surging Bank Deposits May Collapse the U.S. Dollar

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In another episode of “Strange 2020”, banks have become flush with deposits. But not in the way you might expect.

According to CNBC, “A record $2 trillion surge in cash has hit the deposit accounts of U.S. banks since the coronavirus first struck the U.S. in January.”

In one month, deposits grew by $865 billion, which beat the record for an entire year.

You can see the incredible jump in deposits in the official chart below, starting as the pandemic hit earlier this year:

fred

When you see such a large deviation from the norm, you don’t have to have a degree in economics to suspect something is fishy. According to CNBC, the Fed appears to be partly responsible for this anomaly:

The Federal Reserve began a barrage of efforts to support financial markets, including an unlimited bond-buying program. And an uncertain future prompted decision-makers, from two-person households to global corporations, to hoard cash.

Fox Business notes, “About two-thirds of the [$2 trillion in deposits] flowed to the nation’s biggest banks.” So if $1.34 trillion in deposits flowed from retail, asset managers, government programs like the Paycheck Protection Program, and big company lines of credit over the last five months or so, and only to big banks… that should raise suspicion.

But that much cash flowing into big banks has another potentially big consequence…

Crash of the U.S. Dollar Could Be “Inevitable”

The U.S. dollar may be headed for trouble in the near future, and the CNBC piece finishes with one possible reason why:

A lot of banks are saying, “There’s frankly not much we can do with it right now”… They have more deposits than they know what to do with.

If banks have trillions of dollars, but there isn’t anywhere for that money to go, that has a number of potential outcomes.

…click on the above link to read the rest of the article…

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