When inflation is unexpextedly high, why do the stock prices of banks usually decline sharply?

Question

thoughts?

Answer 1

The US is beyond broke. It is in debt beyond any level ever imagined.

That $250 million a day spent in Iraq is all borrowed money from foriegn countries. The US is so far in debt, the dollar has become worth less than it used to be and investors bail out, dumping dollars and making it worse.

Cutting taxes during a war has never been done before and we're seeing what happens when you pull that stunt.

Answer 2

Banks in general borrow short term and lend long term.  When inflation rises it increases their short term borrowing costs but their long term lending is locked in at  fixed rates and their margins contract considerably.

Answer 3

It's not just bank stock prices which rise during inflationary times, but inflation takes a toll on most stock prices since many company stocks reflect the increased price to produce and distribute their products as well.