U.S. Economy

Ryan and Tho welcome Peter St. Onge to discuss the political response to the recent turmoil in the banking system.

The story of the failure of Silicon Valley Bank is the story of nearly every bank failure. Fractional reserve banking invites the risky behavior that brings down the banking system.

Ever since the Luddites rampaged through British textile factories in the early 1800s, people have feared that technology will result in mass unemployment. They were wrong then and are wrong now.

Even if Powell is sincere in this stated desire to slay inflation with more rate hikes, recent bank failures will put the Fed under enormous pressure to end its rate hikes and to once again embrace easy money to save the banks and Wall Street. 

The Fed is launching a new billionaire bailout designed to keep banks afloat, and the FDIC is promising to back potentially trillions in deposits. The taxpayer will ultimately be on the hook. 

Federal authorities want us to believe that by bailing out Silicon Valley Bank, they have prevented a financial crisis. Instead, we will have a crisis with bailouts.

The incredible growth and success of SVB could not have happened without negative rates, ultra-loose monetary policy, and the tech bubble that burst in 2022.

Mark explains why SVB Bank and Signature Bank failed, and why it was bound to happen. 

Any realistic review of the Federal Reserve’s MBS experiment would conclude that the Fed should stop buying mortgages.

The current job market strength partly reflects the ongoing monetary overhang from years of breakneck growth in money-supply inflation. The $6 trillion in money that was newly created since 2020 is still very much a factor.