According to Cramer, potential bank failures may hinder Fed’s rate plans.

by | Apr 20, 2023 | Bank Failures | 33 comments

According to Cramer, potential bank failures may hinder Fed’s rate plans.




Mad Money host Jim Cramer looks at why, after a ‘fistfull’ of bank failures, there’s a good chance the Fed could almost be finished with rate hikes. Sign up and learn more about the CNBC Investing Club with Jim Cramer

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As the Federal Reserve continues to contemplate its plans to increase interest rates, one prominent voice is warning about the potential impact of bank failures on those plans. Jim Cramer, the host of CNBC’s “Mad Money,” recently argued that a spate of bank failures could “put a crimp” in the Fed’s rate-setting decisions.

Cramer’s comments come amid reports that the Fed is considering two rate hikes in 2023, a faster pace of tightening than originally anticipated. The central bank has been under pressure to address inflationary pressures, and its decision-making has significant implications for borrowers, savers, and investors alike.

For Cramer, the potential for bank failures is a significant wrinkle in the Fed’s plans. As he explained, if a significant number of banks were to fail, it could have a ripple effect throughout the financial system, leading to tighter credit conditions and a decrease in lending.

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“Remember, we’ve got a lot of banks, and if they start going under, the Fed’s not going to be able to raise interest rates,” he said on CNBC. “They’re going to have to lower interest rates, because that’s what they do in a crisis.”

Cramer’s concerns are not unfounded. Bank failures can have far-reaching consequences, such as reducing the availability of credit for businesses and consumers, undermining confidence in the financial system, and potentially triggering wider economic instability.

Moreover, while the banking sector has largely weathered the economic storm of the pandemic, it remains vulnerable to a variety of risks. A surge in defaults or a sudden increase in interest rates could put pressure on banks’ balance sheets and lead to a wave of failures.

Given these potential risks, the Federal Reserve will likely be keeping a close eye on the health of the banking sector as it continues to evaluate its interest rate plans. If signs of stress begin to emerge, the central bank may opt to take a more cautious approach to tightening, or even reverse course and lower rates to support the financial system.

For borrowers, savers, and investors, this dynamic underscores the importance of closely monitoring developments in the banking sector and staying informed about the Fed’s policy decisions. With potential risks on the horizon, it pays to be prepared for whatever the future may hold.

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33 Comments

  1. C

    If your following Cramers advice, good luck. Your gonna need it for your empty bank account.

  2. Naomi Gonzales

    The failure of Silicon Valley Bank has torn into global markets, with investors ripping up their forecasts for further rises in interest rates and dumping bank stocks around the world. I'm at a crossroads deciding if to liquidate my dipping 200k stocck portfoliio, what’s the best way to take advantage of this bear market?

  3. Mike JH

    Hey Cramer! I need a clown for my kids birthday this week. Are you available?

  4. Kristle Manternach

    Investing provides a means of allocating money for the purpose of generating income or profit in the future. By investing, individuals can set aside funds while still engaging in their day-to-day activities, allowing their money to work for them and reap the rewards of their labor in the future. It is important to invest wisely, making informed decisions and carefully considering the risks and potential returns associated with each investment opportunity. I now have a core understanding of trading & investing in Cryptocurrencies. Thank you Jim Yockey. He explain it all so in-depth, even for the advanced users. So no matter your experience there’s always something you can learn!

  5. sam gabriel

    It's just the early cracks of very hard landing.

  6. D H

    March 2008 – Cramer said Bear Sterns was fine. – One month later…. Bear Sterns failed.

    August 2008 – Cramer said to buy Lehman. Firings were good for earnings. … One month later…. Lehman failed

    Feb 2023 – Cramer said SVB Bank was compelling…. One month later… SVB Bank failed

    March 2023 – Cramer says "JP Morgan is a Fortress!!!"…. Lets see what happens in April….

  7. Yolotrumpbucks

    This confirms rates are about to pamp it

  8. A N

    So the Fed is actually going to keep raising rates and banks will drop further. Bitcoin is going to 100K.
    Deflationary? Been to the grocery store lately?

  9. FreeMan OnTheLand

    Whatever this guy says, just do the opposite.

  10. Carl Lucci

    How does this clown have a job?

  11. Stuart Hayward

    Banks don’t have your money, that’s the root cause of the problem, everything else is just a distraction

  12. Nevets1311

    So when you say buy lol you just sold. Prove me wrong

  13. Dam Ham

    What insider info did Cramer have when he pushed SVB as a buy right before it failed ? Was he trying to sell his stock in SVB off , knowing the fall was coming ?

  14. Roger gr

    This is a true Southpark character

  15. branned

    Biden bailing out the top 1%

  16. MICHAEL MCDONELL

    What about those insiders who sold their shares the day before, is that a fraud?

  17. Jakob Rassi

    Jim Cram promises to find me the next bull market lmfao. What he does is helps people find the greatest short position of all times consistently like meta when he said it was great and then right after dumped heavily, and SVB which collapsed, and countless other examples.

  18. DrScopeify

    The US Economy loves inflation, it created an appetite for it with high employment clearly a sign. With the coming DE-Globalization we will inevitably see long term elevated inflation and so the FED will need to accept 3% or 4% or whatever long term inflation baseline to allow the economy to grow in this new world without risking steep cyclical economy or long term recessions that do more harm than inflation.

  19. Angus Symes

    wasnt this guy proting svb a fews weeks ago?

  20. swfsql

    00:00 Is this that movie? Mission Impossible?

  21. Pnoy_CryptoKingz

    Gotta give it to Jim at least he's consistent, consistently wrong

  22. Quantum Jump

    why would still people listen to this garbage Jim? How many people bought in SVB and got screwed because of his buy comments before the collapse?

  23. Warren Outley

    If you do the exact opposite of what this clown proposes, you will be better off

  24. chip forster

    Cramer, seriously? He promoted svb right before the crash. If you listen to this dub you deserve to lose your money.

  25. Shawn Anderson

    How many times does this guy have to be wrong before they replace him?

  26. T T

    I always do the opposite of what he says, good gains made last year

  27. Uncle Smart Aleck

    I would rather take my investment advice from Blippie (or even Barney) than Jim Craper.

  28. sram

    Cramer is a fraud.

  29. Jack Konnof

    Does Cramer actually believe himself?

  30. Southside School of Financial Freedom

    Cramer is totally wrong about Bitcoin. Bitcoin is a challenge, now a small challenge, to the current monetary system. Almost all who made their money through the current system, including Jim Cramer, hate bitcoin. They are trying to discourage people from investing in Bitcoin; stating that it is was manipulated by SBF is the craziest statement ever uttered. SBF hated Bitcoin because it had real value unlike FTX and his air coin FTT. Value is given to those things that people find valuable. Government and old money oligarchs try to tell you what you should value; however, if you understand money you know that the US dollar is a fiat currency that has no limit and thus loses real value everyday. Bitcoin is not controlled by any one entity and will have as much value as people give it. I believe, people, will see the value of Bitcoin and its price in US dollars will go to the moon.

  31. Chimp

    Jew

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