US banks lost $472B in deposits in the Q1 2023

Except for a brief reprieve during SVB&#x27;s failure, the Fed continues to let the treasury and agency bonds it previously purchased mature, without recycling the proceeds it receives to purchase replacement bonds (i.e., the Fed is destroying the money):<p><a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;graph&#x2F;fredgraph.png?g=15IkH" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;graph&#x2F;fredgraph.png?g=15IkH</a><p>Every day, the US Treasury must issue new bonds to replace those bonds it repays.<p>Given that the Fed is not stepping in to buy more treasury bonds in the open market, the <i>private sector</i> -- individuals, 401(k) plans, pension plans, endowments, mutual funds, etc. -- <i>must find additional liquidity somewhere</i> to buy the new bonds. The US Treasury <i>will</i> issue those bonds at the market-clearing price.<p>A similar logic applies to agency bonds.<p>Every day.<p><i>Of course</i> bank deposits are dwindling!

I dont really understand why the title of the HN post takes a single point out of a dozen different things that the report is about, and even that point doesn&#x27;t have any actual context, which the report expands on.<p>I&#x27;m guessing it&#x27;s trying to subtly editorialize the report.<p>Better title would just be the &quot;Quarterly Banking Profile&quot;

1. Bank Deposits have not kept up with MMFs. I transferred about 85% of all my cash into a money-market fund to keep up with the Fed Benchmark rate (currently 5%).<p>2. Fed has been purposefully destroying money through its policy decisions. This is on purpose, because the Fed&#x27;s only tool to combat inflation is to destroy money (either directly, or indirectly).<p>3. In regards to #2: Mortgage rates are higher, car loans are higher, etc. etc. People in practice have relatively lost a lot of money because of this and have to tap their savings. Note that this FDIC document has noted that somehow, we have less delinquencies right now. So it seems like Americans are remaining responsible and paying off their debts.<p>---------<p>Frankly, I&#x27;m surprised that &quot;only&quot; ~$500B of deposits have fled classic banks. People really should be moving their money to MMFs to take advantage of these much higher interest rates and the current Fed repo rate.

For reference, it looks like current bank deposits are at 19.21T.<p><a href="https:&#x2F;&#x2F;ycharts.com&#x2F;indicators&#x2F;us_banks_total_deposits" rel="nofollow">https:&#x2F;&#x2F;ycharts.com&#x2F;indicators&#x2F;us_banks_total_deposits</a>

&#x27;PDF&#x27; in the title would be useful

These scary headlines are meaningless without context. If you are going to try and panic folks, at least do it right. Such a lack of effort, show some respect.

Overview with less click-baity headline:<p>&quot;U.S. banks saw record deposit declines [-2.5%] in Q1 as profits remained steady: FDIC&quot;<p><a href="https:&#x2F;&#x2F;www.reuters.com&#x2F;markets&#x2F;us&#x2F;us-bank-deposits-fell-record-pace-while-profits-flat-q1-fdic-2023-05-31&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.reuters.com&#x2F;markets&#x2F;us&#x2F;us-bank-deposits-fell-rec...</a><p>&gt; &quot;The FDIC said the $472 billion in deposit outflows in the first quarter was the largest it had recorded since it began collecting such data in 1984. The decline was primarily from uninsured funds, as insured deposits actually rose $255.1 billion, or 2.5%, amid the failures of Silicon Valley Bank and Signature Bank.&quot;<p>This apparently means there was a 5% drop in the total uninsured funds, meaning likely about one-third of those funds were broken up into cash sweeps (into multiple smaller deposits, each under the FDIC limit for insured deposits)?<p>edit [uninsured funds exodus = 472 + 255 + ? offshored] ?

Interesting. Where did these $472B go? My understanding is that this didn&#x27;t go into another bank, that $472B is a net across all banks. Did people start investing more? Did this money go into the economy?

While this is a single headline picked out from multiple pages of detail information, the economy (both US and worldwide) has certainly seen better times.<p>For the last few months, especially the smaller, regional banks in the US felt the effects of fear the recent collapses have caused. That said, with the general slow-down and the risky game the SVB and others were playing, this had to happen eventually.

What did you expect to happen with contracting M2? It has shrunk approximately to the same ~$500B in Q1.

Would money moved to higher yielding bonds&#x2F;money market accounts count towards this &quot;loss&quot;? If so, I personally have convinced tons of people to move their cash to vanguard VMFXX which currently has a 5.04% yield (after their fees too!).

This is literally fine.

&gt; The decline was primarily from uninsured funds, as insured deposits actually rose $255.1 billion, or 2.5%<p>This seems like good news, and what we would want to happen.

There could have been more bank failures, given these figures ? I mean that&#x27;s quite of lot of failing credit...

Presumably to instruments&#x2F;organizations that are not US-based.

$472B is approx. 2.03% of a $23.3T economy

Taxes?

Imagine if we had just given that money to Ukraine instead, sheeeesh I can&#x27;t believe the pro-russian banks wouldn&#x27;t do that

It&#x27;s a nitpick but... &quot;Lost&quot; implies they don&#x27;t know where they went. They do. They were just withdrawn.