Let’s review the Federal Reserve Bank’s many roles, & how each of them enabled the SVB failure/malfeasance:
(1) Santa Claus.
By keeping interest rates artificially low, FED stimulated the economy, & nudged those with capital into the VC space creating demand for a bank like SVB.
(1) Santa Claus.
By keeping interest rates artificially low, FED stimulated the economy, & nudged those with capital into the VC space creating demand for a bank like SVB.
(2) Arsonist.
FED created $5 trillion out of thin air so Congress could inject this money into the economy. There weren’t 5 trillion dollars to borrow during COVID, and certainly not at the low rates imposed by FED. Inflation was off to the races thanks to dilution.
FED created $5 trillion out of thin air so Congress could inject this money into the economy. There weren’t 5 trillion dollars to borrow during COVID, and certainly not at the low rates imposed by FED. Inflation was off to the races thanks to dilution.
(3) Firefighter.
After setting the blaze, FED came to the rescue to fight inflation by rapidly increasing interest rates. As a result, net VC startup deposits into SVB slowed, while assets held by SVB (long-term low-interest government debt) became less valuable.
After setting the blaze, FED came to the rescue to fight inflation by rapidly increasing interest rates. As a result, net VC startup deposits into SVB slowed, while assets held by SVB (long-term low-interest government debt) became less valuable.
(4) Trauma Doctor.
Will the FED play a role in bailing out SVB depositors and other banks? Possibly by lowering rates, buying their holdings at above value, or creating more money for bailouts. None of these are free. But the FED becomes Santa Claus again and inflation rages on.
Will the FED play a role in bailing out SVB depositors and other banks? Possibly by lowering rates, buying their holdings at above value, or creating more money for bailouts. None of these are free. But the FED becomes Santa Claus again and inflation rages on.
We, the American people, would be better off if the Federal Reserve Bank, an instrument of the very wealthy and connected, did not exist to socialize the risks of insiders while distorting our economy, destroying jobs, and devaluing our currency.
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