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Why Is Lebanon Having A Financial Crisis?

Why Is Lebanon Having A Financial Crisis?

Lebanon learns the hard way. Think it can’t happen to you? Guess again…

The signs were there all along.

Lebanese banks *temporarily* froze customer accounts in 2019 amid an economic downturn.

Nothing to worry about, they said. Things will soon return to normal, they said. It’s for your own good, they said.
Zahlé, Lebanon

None of it was true. Things only got worse.

Amid mounting restrictions over the following years, millions of people started realizing something was terribly wrong.

Watching your life savings slip away with every stroke of a bureaucrat’s pen is a special kind of horror.

Maybe, it really was time to panic after all…

Then in 2022, bank heists started becoming common place.

Only, these weren’t masked bandits with colt revolvers and Kelly Silver Star spurs. No, these were ordinary citizens trying to claim back their own savings – usually with the aid of hunting rifles.

Time to call in the goon squad.

Soldiers and police officers were stationed outside bank locations, clutching M16 rifles as people crowded around the entrances.

The atmosphere was, shall we say, tense.

Dejected and broken, depositors were reduced to waiting in line for hours every week, begging for permission to withdraw pennies on the dollar.

United Nations Lebanon headquarters

The insanity of it all drove people past the point of desperation.

September 17th, 2022 brought a record of five bank robberies in just a single day.

That really did it.

On October 7th, 2022, Lebanese banks voted unanimously to close their doors out of “safety concerns” for employees and customers.

Need money to pay for food and rent? Too bad.

An estimated 80% of Lebanon’s population is now living below the poverty line.

Turns out, those bank deposits weren’t really money in the first place. That’s because fiat currency is just another word for debt.

Government issued fiat currency is an empty promise of repayment and lets politicians use an entire nation’s economy as a gigantic margin account.

However, as we’re now seeing, those margin calls aren’t exactly fun, and look like an inflationary melt-up in prices.

Yes, the Lebanese pound has lost 97% of its value against the dollar and is now changing hands at around 46’000 per USD – a far cry from the official rate which is comically set at 1’500.

At 186% annual inflation, the situation is now more dire than misery hotbeds like Zimbabwe and Venezuela.

But don’t worry, that can’t happen here. Never mind the dollar has lost 96% of its purchasing power since 1913.

That’s because Western political leadership can become trusted with money. They’re the adults, so stop asking questions.

In fact, that’s why you need to completely surrender control.

This is where CBDCs come in, which are now becoming rolled out.

Nope, nothing to worry about. Just go back to sleep.

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Written by Andrew Axelrod

Relationship Manager with over a half-decade experience in managing key institutional client relationships in North America, continental Europe, and Asia (ex-Japan) markets with a +95% retention rate.

Passionate about finding best-in-class financial solutions for FOs, MFOs, UHNWI investors. In addition, institutional clients, including IFAs, asset managers, and licensed broker-dealers.

In today’s world, those best-in-class solutions are in crypto.

Transitioned from TradFi to crypto in 2021, joining Coinbase’s new Prime Broker desk for institutional clients. Help clients gain a foothold in the digital asset space. In addition, provide education with a LinkedIn following of 4K and over 1.5M content views.

Andrew possesses both an M.A. & B.A. degree from University of St. Gallen!

Why Is Lebanon Having A Financial Crisis?