Fallacy Alarm

Fallacy Alarm

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Fallacy Alarm
Fallacy Alarm
BTFP is insufficient.

BTFP is insufficient.

We need more $$$.

Rene Bruentrup's avatar
Rene Bruentrup
Mar 14, 2023
∙ Paid
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Fallacy Alarm
Fallacy Alarm
BTFP is insufficient.
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Quantifying the problem…

US banks are sitting on $18tn worth of fixed income assets, primarily consisting of loans, mortgages and bonds. Interest rates have increased by >4% over the past year. Assuming just 5y average duration would wipe out 15-20% fair value. This wouldn’t be an issue if they held until maturity, but what if they have to liquidate thes…

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