Global Hedge Fund Manager Warns The Possibility Banks Will Begin Restricting Cash Withdrawals Is ‘Rising Like Mercury’

Aired on May 17th, global hedge fund manager and macro guru Hugh Hendry provided his thoughts on the international banking crisis on The Daniela Cambone Show. He warned that the Federal Reserve’s monetary policy has raised the probability that customers could eventually face restrictions on the amount of physical cash they can withdraw.

If we went back a year ago, the probability you would assign to that would be almost zero. And I’m saying that probability, like mercury, is rising.

Why is it rising? It’s rising because we have experienced, I call it ‘the Fed folly.’ One can say factually that this Fed hiking is the fastest and of the greatest magnitude. They’ve never done this before.

He told Cambone

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He also noted that the United State’s banking industry will probably begin to see more flights in deposits because customers have a much easier time extracting their money than before.

[The] Fed’s rate hikes over the past year have created an environment that makes it attractive for depositors to take their money out of banks and invest it in money market funds.

A combination of being stuck with these uncompetitive rates and now the tyranny that money can fly so quickly […]. The thing that’s pulling money out is the Fed’s offering too much via money markets. I mean, you could go to the Fed directly.

So what’s the Fed doing? It’s encouraging more and more and more money to leave banks.

Hendry said

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