Last February brought with it the failure of Silicon Valley Bank, First Regional and Signature Bank. At the time, the crisis was quickly spreading and the Fed was forced to step in with an emergency facility known as the Bank Term Funding Program (BTFP), which allowed banks to turn in underwater treasuries in return for cash equivalent to the par value of the treasuries at a very low interest rate. The BTFP is structured as a 1-year loan and Jerome Powell and company announced that they will not be extending the BTFP due to the fact that banks were taking the cash and dumping it into higher yielding facilities at the Fed to take advantage of an arbitrage opportunity that the BTFP opened up, which hindered the Fed's balance sheet.

This is your life on central planning.

Even when the lender of last resort steps in to help out, the banks will seize on the opportunity to take advantage of any opportunity that arises to achieve their yield targets. Even if that means biting the hand that fed you. A real life manifestation of the ouroboros destroying itself.

With the BTFP set to come to a halt next month it seems that markets are taking a gander at the markets, noticing that the 10-Year US Treasury yield is hovering a bit higher than it was when the banks started failing last year, the 30-Year is holding steady well above where it was this time last year, noticing that companies are laying off their employees en masse, and beginning to come to the realization that the problem that led to the failure of the banks last year has not been solved at all.

If anything, it has been exacerbated and the ultimate consequences of more than a decade of ZIRP followed by a rapid increase in interest rates are quickly approaching our doorstep.