The best-selling author of ‘Rich Dad Poor Dad”, Robert Kiyosaki has warned that bank failures are not over, and that the worst is yet to come.
Kiyosaki: US on the precipice
On Thursday, Kiyosaki tweeted that more banks are rumoured to fail, pointing to the lending company Loan Depot as the next possible victim in a series of failed US regional banks.
“More banks about to fail. Rumor is Mortgage giant Loan Depot is on the ropes,” Kiyosaki said.
More banks about to fail. Rumor is Mortgage giant Loan Depot is on the ropes. Regional banks and mortgage companies are falling. Please be careful. I would not believe anything Pres Biden, Fed Chairman Powell or Sec Treasury Yellin say. Think for yourself.
— Robert Kiyosaki (@theRealKiyosaki) June 15, 2023
Powell: We do expect that there’ll be losses
This week, Federal Reserve Chair Jerome Powell stressed that he sees the banking system as strong and resilient. After holding rates for the first time in 15 months on Wednesday, Powell said it was too early to see the full impact of tighter credit conditions, despite a string of failure earlier this year which started with Silicon Valley Bank.
One report published in Stanford Business by professor Amit Seru in April found that nearly half of America’s 4,800 banks are “burning through their capital buffers’ to stay afloat.
In today’s #FOMC Jerome Powell accidentally says “skip” instead of “pause” — signalling that there is full intention among Federal Reserve members to continue raising interest rates at the next meeting. In the meantime, #inflation continues to kill the middle class as intended. pic.twitter.com/xvtVoCUocE
— Al Bert Herne CFA, shorting $SLV to $0 (@albertherne) June 14, 2023
Chairman Powell has said more bank failures are expected, suggesting that the collapse of more financial institutions is among the basket of signals the Fed considers with regards to potential rate cuts in the future.
Powell told reporters this week:
“There’s a substantial amount of commercial real estate in the banking system. A large part of it is in smaller banks. It’s well distributed. We do expect that there’ll be losses, but there’ll be banks that have concentrations and those banks will experience larger losses. So we’re well aware of that. We’re monitoring it carefully. It feels like something that will be around for some time as opposed to something that will suddenly hit and work its way in a systemic risk.”
Financial contagion
Speaking to Kitco news, the author elaborated on banking turmoil, underlining that contagion and systemic risks in the banking system are cause for concern. In his view, the housing situation in the US will make the 2008 financial crisis pale in comparison to what’s coming in 2023. A great property crash is coming to the United States, Kiyosaki said.
“Greatest Real Estate crash ever. 2008 was the GFC. 2023 will make the 2008 GFC look like nothing. In 2019 Office Towers in San Francisco were hot,” he tweeted. “In 2023, the same buildings have lost 70% of value.”
This year, Kiyosaki’s warnings have become more frequent. In February, he called for a market crash following a wave of layoffs at tech giants. Another time, he said the world has already entered a global recession.
Q: WHATIS WORSE THAN A GREAT DEPRESSION? A: a global recession. UNFORTUNATELY we are in GLOBAL RECESSION. Hang on. Rough landing for world. BAD NEWS Bankruptcy, Unemployment, Homelessness soar. Retirements toast. GOOD NEWS. Bargains everywhere. Gold, Silver, BC PRICELESS.
— Robert Kiyosaki (@theRealKiyosaki) January 28, 2023
Kiyosaki is not alone in raising the alarm. In an interview at the Bloomberg Invest New York conference, legendary investor Stanley Druckenmiller issued a dire warning on the state of the US economy, noting that ‘more shoes to drop’ when it comes to traditional US banks.
Both Robert Kiyosaki and Stanley Druckenmiller are proponents of Bitcoin.
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