The capital position of the U.S. banking system relative to its liabilities is worse than it was when the last financial crisis hit back in 2007. From Alasdair Macleod at lewrockwell.com:
This article points out the dangers to the value of credit from a rickety global banking system. This will almost certainly become the primary driver in the gold to credit relationship.
This article points out the dangers to the value of credit from a rickety global banking system. This will almost certainly become the primary driver in the gold to credit relationship, replacing the so far relatively benign downwards long-term drift in currency purchasing powers. In other words, it is increasing awareness of systemic risk and debt traps that will drive the relationship, not false theories about interest rate differentials.
The entire western banking system is close to collapse
Because there is an apparent lull in the banking crisis, it has disappeared from the headlines. But that doesn’t mean it has gone away. A further deterioration in bank balance sheets will undoubtedly call into question the values of individual bank counterparty credit, entire banking systems, central banks, and currencies themselves. Let us remind ourselves of where we are in the bank lending cycle by looking at the relationship between bank equity capital and their balance sheets. The chart below shows the aggregate position for the entire US banking system.
