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A couple weeks back as the SVB story was breaking, someone here on HN said (and I paraphrase): "okay. that's it. there's no way the fed will raise rates now tha

A couple weeks back as the SVB story was breaking, someone here on HN said (and I paraphrase): "okay. that's it. there's no way the fed will raise rates now that they're destroying the banks." And I was thinking... "I'm not sure 'destroying the banks' is a metric the fed tracks. Unemployment and inflation are." But the earnestness with which the comment was offered. It was, as you say, like the commenter was willing the fed to do what they wanted. I guess magical realism isn't just a literary genre.

chrisco255 4y ago
The Fed is the central bank. Its primary purpose has always been to be the lender of last resort and provide liquidity to the banking system. Of course they track the health of the banking system. https://en.wikipedia.org/wiki/Lender_of_last_resort https://en.wikipedia.org/wiki/Lender_of_last_resort It's often stated that their two goals are to maximize unemployment and minimize inflation, but those are ultimately secondary to maintaining the overall health of the banking system and financial sector (although it's generally thought that aiming for those two goals help achieve that stability).
- ericpauley 4y ago
  The causality arguably goes the other way. Banking stability is instrumental to maximum employment and price stability.
deleted 4y ago
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tdullien 4y ago
So there is a strong argument that the construct the Fed chose for the SVB depositor bailout was very much designed to give them free hand to continue rate hikes.
kneebonian 4y ago
> And I was thinking... "I'm not sure 'destroying the banks' is a metric the fed tracks. Unemployment and inflation are." It's interesting you say that. Putting on my tinfoil hat for a second. People who have been making their fortunes on easy access to capital, VCs and the tech sector, are now mad that the rates are going up and it is starting to kill their golden gooses. Since the fed isn't listening to them they are going to force the Fed to listen to them by laying people off to increase unemployement and will continue to do so until the Fed relents to their demands.
- sangnoir 4y ago
  > Since the fed isn't listening to them they are going to force the Fed to listen to them by laying people off to increase unemployement and will continue to do so until the Fed relents to their demands. That would be threatening the Fed with a good time! The Fed has lower consumer demand as a target metric, and laying people of is one way to achieve that goal (roughly speaking).

chrisco255 4y ago

The Fed is the central bank. Its primary purpose has always been to be the lender of last resort and provide liquidity to the banking system. Of course they track the health of the banking system. https://en.wikipedia.org/wiki/Lender_of_last_resort https://en.wikipedia.org/wiki/Lender_of_last_resort It's often stated that their two goals are to maximize unemployment and minimize inflation, but those are ultimately secondary to maintaining the overall health of the banking system and financial sector (although it's generally thought that aiming for those two goals help achieve that stability).

ericpauley 4y ago
The causality arguably goes the other way. Banking stability is instrumental to maximum employment and price stability.

deleted 4y ago

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tdullien 4y ago

So there is a strong argument that the construct the Fed chose for the SVB depositor bailout was very much designed to give them free hand to continue rate hikes.

kneebonian 4y ago

> And I was thinking... "I'm not sure 'destroying the banks' is a metric the fed tracks. Unemployment and inflation are." It's interesting you say that. Putting on my tinfoil hat for a second. People who have been making their fortunes on easy access to capital, VCs and the tech sector, are now mad that the rates are going up and it is starting to kill their golden gooses. Since the fed isn't listening to them they are going to force the Fed to listen to them by laying people off to increase unemployement and will continue to do so until the Fed relents to their demands.

sangnoir 4y ago
> Since the fed isn't listening to them they are going to force the Fed to listen to them by laying people off to increase unemployement and will continue to do so until the Fed relents to their demands. That would be threatening the Fed with a good time! The Fed has lower consumer demand as a target metric, and laying people of is one way to achieve that goal (roughly speaking).