Thread by @rethinkecon

Starting 2-weeks ago #SVB, #CreditSuisse & a few other smaller US banks failed. Whilst this is yet to become a #FinancialCrisis on the scale of ’08, it is also not certain that such a crisis hasn’t already begun. Join us for a thread of the best analysis so far!

First up, let’s acknowledge last year's release of @stefeich's – The Currency of Politics, and this interview in @thenation prior to the SVB collapse. His work provides important background understanding on the nature of money, banking and monetary policy.
thenation.com/article/econom…

Perhaps the greatest contribution has been from @NathanTankus, with 4(🔥) articles released. We highly recommend not only reading his recent articles, but much of his previous work on money, banking, #inflation and the complex legal structures surrounding monetary institutions.

"All there is is public money flowing out, and public money flowing in. That means this narrative about how 'taxpayer money' (a nonsense phrase) was 'not involved' in supporting uninsured depositors is nonsense.” - crisesnotes.com/whats-going-on…

@NathanTankus when banks start to fail.

@Claudia_Sahm reminds us of the financial crises of 1907 and 1984. Regarding the Volcker shock - “You wanted Volcker. Be careful what you wish for… We should have talked more about how his big and rapid hikes created crises in financial markets.”
stayathomemacro.substack.com/p/a-fed-tale-a…

“Should sophisticated lenders who make bad loans suffer losses accordingly? Of course” - A J Pollock shows no hesitation in advocating for allowing failing banks to fail and uninsured deposits to go down with the bank.

lawliberty.org/the-silicon-va…

@ProfSteveKeen suggests how we could decouple the private banking industry from the necessity to purchase Central Bank bonds in the first place.

“Call me callous, but, given a choice between bond traders losing a lucrative gig, or the financial system collapsing, I'd be happy to see bond traders become rather less wealthy.” - @ProfSteveKeen
patreon.com/posts/simple-s…

@martinwolf_ of the @FT outlines four approaches to reform that might mitigate systemic financial risk.
"the vaunted reforms introduced after the global financial crisis have not changed any of this that much”
ft.com/content/70ce4b…

Yeva Nersisyan and L. Randall Wray explain the nature of interest-rate risk and their view that “higher rates reduce inflation only by creating financial crises that crash the economy.”
thehill.com/opinion/congre…

@LevMenand explains the flaws in supervision which should spot warning-signs when banks game regulations. The supervisory bodies look only at the internal processes & procedures, failing to question the decisions that come out of those procedures.
bloomberg.com/news/articles/…

Finally, on his Macrodose podcast, @meadwaj asks - When even historically risk averse funds like pensions incorporate some of these riskier investments over the past decade, what happens when rates start increasing rapidly?
patreon.com/posts/80344487

There’s many more great pieces out there and we expect more to come.

Who did we miss from this thread?

Which articles have you read that were the most informative?

Let us know.

If heavy reforms and regulations are needed to avoid crises - is it time to move towards a public banking system?

Combining the functions of payment processing & riskier lending makes banks inherently fragile - @youellog argues.
positivemoney.org/2023/03/fresh-…