4 ms·
The government and its institutions (The Fed) had a big part in this though. They flooded the market with cash, sold a bunch of bonds with low interest rates (
by nemo44x 4y ago
The government and its institutions (The Fed) had a big part in this though. They flooded the market with cash, sold a bunch of bonds with low interest rates (lowest ever) to tons of banks that had to figure out how to manage that cash and did so by buying “the safest investment”, and then that same institution jacked up interest rates to the highest in 20 years over the course of 10 months.
So no, if the government and the fed would actually let the market set interest rates then this doesn’t happen. If the UST had to sell bonds at the real market rate for them then this doesn’t happen.
- ak_111 4y agoI am not a fan of the Fed, but it was created precisely to stabilise the banking system due to a huge number of bank runs (that happened before it was created). I think the only consistent libertarian position on this would be to concede that bank runs are totally normal (and welcome even) aspect of a capitalist system and they should never be bailed out or depositors compensated as it would be rewarding irresponsible behaviour (both by shareholders AND depositors).
- almog 4y agoThey had plenty of time to hedge against that risk — the Fed since almost a year now has been "higher for longer". Believing and pumping the Fed pivot narrative and by doing so betting wagainst the Fed is what failed them.
- nemo44x 4y agoI’m not saying the SVB management is not to blame. Their business should go to 0. I’m just saying that the gov policy and erratic Fed policy caused this. The Fed is creating a lot of problems right now. They’re going to kill the patient trying to kill the cancer.
- almog 4y agoHow do you distinguish cause and blame then?