Some have wrongly blamed the current bank failures on the Federal Reserve’s interest rate increases. The real problem is how the Fed encouraged the entire financial system to get addicted to easy money.
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 only thing that saves citizens from much higher prices is the fact that the transmission mechanism of monetary policy is independent and diversified. Imagine if that transmission was direct and had only one channel, the central bank itself.
