John F. Kennedy, a Republican representative and senator from Louisiana, described the banks as “complicated Ponzi schemes.”
These statements were spoken during a discussion of the American banking crisis, which during the previous two months had caused the simultaneous collapse of a number of financial institutions backing cryptocurrencies.
Additionally, the politician discussed inflation. He thinks that in order to get control of the issue, the US Federal Reserve System (FRS) must raise it to at least 8%.
Kennedy stressed that banks depend on trust for their existence in an interview with CNBC and that, in the age of sophisticated communication technology, this has made them more susceptible.
It’s really just, don’t get me wrong, complicated Ponzi schemes,” he said. – They work when all participants trust each other.
Kennedy claimed that anyone may become bankrupt given how quickly a bank panic can spread, starting with a message on an iPhone.
It’s interesting that the US Federal Reserve emphasized on Wednesday that the financial system is still secure. The US Federal Reserve and the Treasury Department, according to former Coinbase CTO Balaji Srinivasan, typically do not alert the markets to looming risk until a very severe recession starts.
Kennedy stated that unless the issue is handled from both a monetary and fiscal viewpoint, reducing inflation will necessitate significantly higher rises in interest rates, from the present 5%-5.25% to 8%-10%.
According to Powell, the head of the Fed, rates will need to be raised considerably higher than usual if Congress slows down the spending boost.
The major cause of the decline in the percentage of bonds in portfolios and the eventual insolvency of banks like Silicon Valley Bank is said to have been the increase in interest rates. According to market research, bitcoin may be better able to withstand monetary tightening this year than it did last, thanks to its recent price increase.