3 ms·

SVB indeed made some very questionable bets, but people should remember that the Fed was saying "inflation is transitory" up until the end of 2021: https://fort

by hnfong 4y ago

SVB indeed made some very questionable bets, but people should remember that the Fed was saying "inflation is transitory" up until the end of 2021: https://fortune.com/2021/12/03/inflation-no-longer-transitory-higher-prices-fed-chair-powell-treasury-yellen/ https://fortune.com/2021/12/03/inflation-no-longer-transitor... If you actually believed that narrative, you wouldn't think buying long term MBS was that risky. I think you'd be crazy not to doubt the narrative at least a bit given all the money dumped into the system during covid, I'm just saying it's not just one bank making questionable stupid decisions.

causality0 4y ago
High inflation was coming anyway due to the baby boomer cohort retiring. Then the governments of the world pulled ten trillion dollars out of thin air. Anybody with a business degree who didn't see crazy high inflation coming out of that should've had it revoked.
- hnfong 4y ago
  > Anybody with a business degree who didn't see crazy high inflation coming out of that should've had it revoked. Jay Powell had a degree in politics and law. So, yeah.
  - jjeaff 4y ago
    Powell completed his JD in 1979 but then started working in investment banking by '84 and stayed in various finance jobs including under-secretary of finance from then to now. So he has the relevant experience. I doubt a business degree rather than a JD from the seventies would make any difference today.
polygamous_bat 4y ago
Job of the risk team is to be skeptical, ask "but what if it's not?" and hedge against that possibility. If your job is to believe everything you hear without doing proper risk analysis, why should a bank pay you?