Inflation will remain high
May 9th, 2023 | 
Author: 
Many US banks, including the large ones, are in financial trouble. They have lent a few trillion dollars in 30 year mortgages at fixed interest rates of 3% or less. Based on the current high interest rates, the value of their mortgages could have fallen by 30% or more. The loss is staggering.
The banks are able to mark these mortgages as “held to maturity”. They can spread out their losses over the next 30 years, but it will still be a painful loss.
If there is a large withdrawal of deposits, they have to sell off their mortgages at steep loss to pay the depositors. They have to recognize the losses immediately.
Not all banks are caught in this financial crisis. Some may be less exposed than others. However, if some of the more exposed banks fail, they will affect the other banks due to “contagion”. The whole banking system could be in crisis.
To avoid the fall of the banking system, the US Fed will have to lower their interest rate and allow inflation to remain high. The high inflation will mean that the ordinary people will pay for the losses through higher cost of living.
This is not fair to the ordinary people, but it is likely to be the outcome. I cannot see anyway that it can be avoided as the alternative is a collapse of the banking system, which will be disastrous.
The banks in Singapore are less exposed to this financial crisis, compared to the US banks. The Singapore banks do not offer long term mortgages at fixed interest rate. Some may fix the interest rate for up to 3 years, but the interest rate will be adjustable, i.e. floating, after this initial period.
The floating rate mortgages protect the banks from the fall in the property values (due to high interest rate). However, it does not protect the owners, who have to bear the loss. The owners who cannot afford the higher interest rate have to give up their property at large losses. It will impact the economy and the property market badly as well.
If the US Fed lower the interest rate to protect the banking system, it is likely that other countries will follow. The global economy will have a long period of high inflation, but it is probably better than a collapse of the banking and financial system.
Disclaimer – this is a personal view. I may be wrong.
Tan Kin Lian
Posted in 
“but it is probably better than a collapse of the banking and financial system.” Unquote!
Tan Golden Chain,
Your Great Personal View is macham KICKING THE MOTHER OF ALL BIGGEST CANS DOWN THE LOONG AND WINDING ROAD! Which means Those Big and Filthy Rich BANKSTERS and Gangs in Cahoots will continue their schemes of THINGY while the common folks all over the world will SUFFER THE EVER INCREASING HYPERINFLATION THINGY in terms of housing, food, transport and everything under the BURNING SUN, period!
THINK sooner or later, there will be massive IMPLOSION in LOTS and LOTS of Countries WHEN NOT IF, folks need to carry their fast depreciating currencies in baskets in order to buy a loaf of bread!
Thumb up to this Holee Remark by the Great Janet Yelling(on top of her voice):Fed’s Yellen EXPECTS NO NEW FINANCIAL CRISIS IN “OUR LIFETIMES”!
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https://youtu.be/z1Gz9y8Otfg
Joe Biden the Boss…. the personification of Political Expedience to its perverse extremes…..
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More bullshit from the all-knowing TKL.
As a result of the Federal Reserve hiking rates to crush inflation (thereby causing a recession and possible depression), smaller banks and financial institutions are unable to cope with ‘mark-to-market’ worth of their bonds and securities, as bank depositors create bank runs to get their their money out, to deposit them into the ‘too-large-to-fail’ banks – such as JP Morgan Chase, BoA, CitiBank and others. These banks cannot fail – they will be bailed out no matter what.
This is a period of the US banking system undergoing consolidation – arising from rising interest rates and a banking system that took on too much debt after the Lehman crash.
The new paradigm will see a few large banks holding the assets of the entire US banking sector, underwritten by FIDC and propped up by the Federal Reserve.
In the May FOMC meeting last week, Fed Chair Powell said the Fed is committed to crushing inflation to the 2% target, even if it means crashing the economy. The Fed’s only goal is to bring down inflation no matter the cost.
As a part of this process, the Fed may issue a Central Bank Digital Currency (CBDC) issued to citizens directly that allows it to directly manipulate currency supply and demand, making it the buyer and lender of last resort – to cut out the banking sector that has clearly failed.
$inkieland’s MAS is tied to the US Federal Reserve by currency swap agreements to prop up the $inkieland economy in case this is required. However, if the US dollar falls in value then the $inkie dollar is also going to suffer as a result. It is a double edged sword. The trick $inkeland has (that only communist countries have) is the Gahmen can monetise the people’s assets to save themselves. But this will mean the people will have to bear the burden of any ‘rescue.’
Let the good times roll….
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INFLATE-action= current bout of inflation blamed on *supply issues* by opportuni$tic profiteerer$.
This confirmed by BIGGER N BIGGERER BOTTOM LINE$,eh?
LOOK AT ALL THE PROFIT FIGURE$!
Ummm,doesnt seem to be a *supply* issue?
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Biden will raise the value of the US dollar as it was done previously to lower inflation. The king in the US is the voter so the US government will work to keep costs as low as possible if the Democrats do not want to be voted out. It is quite different from Singapore as no matter what abuses we suffer under the PAP, the abused 61% will continue to vote in the PAP.So all increases are pushed to us the citizens while the PAP continue to draw their million dollar salaries and hidden perks.
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A mild recession in u$a seems likely to happen.
The latter half of 2023 will witness a weaker USD/ASIAN rate of foreign exchange.
Barring a war in Taiwan Straits,we probably see a stronger RMB than currently.
Once Ukraine war recedes ,see a stronger euro as well.
Anything can happen with so many arrogant and volatile characters leading the world.
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But in $in City,INFLATION IS PART OF PAP GOVERNANCE EQUATION.
If no *supply* chain issues,the PAP will MANUFACTURE other$?
It is a HABIT.
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Tough time coming.
Inflation and high COL will affect the bottom 50% hard.
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Practice Usury and thy shalt suffer forever and ever!
One of Jesus’ mission was to eradicate the practice of Usury but he was persecuted.
The corrupted leaders of that era were arrogant and adamant.
The ban on Usury is clearly stated in the Quran. Still the practice of Usury is carried out at unstoppable speed.
And now, everyone is suffering!
Carry on playing with Interest and manipulate it. Soon the whole world shall crumble under the pillars of Greed.
Man has not learned the lessons.
A Great Disaster is looming, verily…
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Practice Usury and thy shalt suffer forever and ever!
One of Jesus’ missions was to eradicate the practice of Usury but he was persecuted.
The corrupted leaders of that era were arrogant and adamant.
The ban on Usury is clearly stated in the Quran. Still the practice of Usury is carried out at unstoppable speed.
And now, everyone is suffering!
Carry on playing with Interest and manipulate it. Soon the whole world shall crumble under the pillars of Greed.
Man has not learned the lessons.
A Great Disaster is looming, verily…
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http://www.investorscn.com/2023/04/01/106617/
光大银行东北地区巨亏13亿，百姓存款安全何去何从？
Mr Tan perhaps give us a breakdown ?
Tech: Err… you heard of Renmin Bank or not?
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