JP Morgan took the bold step to “break a stigma” and announce that it planned to borrow from the Fed’s discount window. The discount window in the context of modern finance has evolved into an emergency source of liquidity. This is nothing more than an attempt at reverse psychology to cover up the fact that JPM is preparing for the eventuality that it will need to tap into emergency sources of liquidity like the Fed’s discount window.
The Fed’s “temporary” repo money printing operations are not doing the trick. The big banks are in trouble from the same type of bad lending decisions that led to the 2008 crisis, only this time it will be worse. Chris Marcus (Arcadia Economics) and I flush out exactly what this means in a short podcast:
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