About the Banking Collapse

I’m in the process of trying to understand what’s going on with the bank failures. And just watching to see what happens. I’m not in a position to explain it all. I can list the bare basics and send you to the people who are explaining it in a way that I can almost grasp it.

Silicon Valley Bank (SVB) failed last Friday, March 10, 2023. That has been the big one in the news. What caused the run on the bank? Bad policies and practices all around. The usual suspects. Government has been overspending for decades, but on steroids lately. They were able to do this without economic failure and hyperinflation, because the Federal Reserve, the bank controlling the “printing” of money, kept interest rates artificially low.

Glenn Beck explains the banking crisis on his Wednesday special
screenshot from here

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But the Federal Reserve had been giving warnings for months that interest rate hikes were coming. Nevertheless, SVB had put its excess cash in long-term low-rate bonds. Something like 10-year locked-in rates of around 1.5% interest. People don’t buy those bonds if they can put their money somewhere that makes more money.

Anyway, this put the bank’s reserves in an upside-down non-liquid form. When too many people withdrew their money, the bank couldn’t supply it. The money was tied up for a decade.

Why did the bank do this? Good question. I don’t have an answer. One detail is that the position of risk manager was left open for the past nine months or so. They probably should have seen the higher interest rates coming; the rest of us did. But apparently no one was watching.

Meanwhile, they were dedicated to hiring someone over ESG scoring—that’s where they invest based on “woke” ideas of morality, rather than on fiduciary responsibility to the investors. So there’s that.

Overall, though, a certain amount of blame has to go to the federal government for spending into oblivion and the Federal Reserve for accommodating that spending addiction by pretending there was enough money.

The Federal Reserve had a precipitous $40B drop this past quarter.
FRED chart from here

The FDIC, which is intended to secure the banking industry by ensuring that depositors can get their money, steps in. This has always been on deposits up to $250,000. Knowing this, sound business practices would involve using several banks to handle larger amounts of money, to make sure each deposit wouldn’t exceed the insured amount.

However, by executive order, Biden came out and promised that all deposits would be covered, regardless of the $250,000 limit. Where would that money come from? Taxpayers. I’m sure it makes you feel all aglow inside to know you’re suddenly on the hook to bail out companies and individuals who deposited beyond the insured limit, knowing they were putting those funds at risk. 

Or, not to worry; the Fed will just “print” more money, leading to higher inflation, so you can pay that way.

It’s unclear where Biden can get authority to make this change. It's also unclear whether he can get away with limiting this sudden change to a specific bank or two or three, or whether this sets up a system where there is no need for risk management, because there will be no consequences for taking bad risks.

While we’re talking about SVB, there are other bank failures going on. One happened a couple of days later, on Sunday. This was Signature Bank. This was more of a surprise. They had thought they had the ability to stabilize and were shocked when the Fed came and took them over.

There was an earlier failure, Silvergate last Wednesday, two days before the SVB failure. They said something like, they saw the writing on the wall. “Recent industry and regulatory developments” led them to see that “an orderly wind down” was their best option.

Signature Bank was considered “the bank for crypto investors.” Silvergate’s focus was also cryptocurrency. Let’s add that SVB, the go-to bank for tech entrepreneurs, also handled a lot of crypto investments. In less than a single week, the nation's three main banks for cryptocurrency were taken over by the government. Strange.

That detail about recent regulatory developments is telling. I can’t tell you exactly what the regulatory changes are. But I am aware that the federal government is diametrically opposed to cryptocurrencies. They intend to move us all to digital currency. Big difference. Cryptocurrencies are decentralized; a digital currency would be centralized. Cryptocurrencies are private and relatively secure. Digital currency would put your ability to buy, sell, receive income, or have access to money you have earned in the hands of government tyrants. The ones who tried to control you during the pandemic and force you to get injections you didn’t want or need and that would harm you. The ones who raid innocent people to cow them into submission when they politically disagree.

A centralized digital currency is an easier way for tyrants to control people than gulags.

Right now, the banking crisis is a warning that they are on the move toward this end. They must not reach it.

The question is whether we are awake enough—and have enough alternatives for a parallel economy—to keep them from gaining the total control they are attempting.

I’m still just trying to grasp the basics. And I don’t really know what to do about it, as a fairly powerless individual. But below are some of the sources I’ve been going to.

Resources

·        “How They’ll Use the Banking Crisis to Control YOU | Glenn TV | Ep 26” Glenn Beck Special, March 15, 2023. 

·       “'Woke' Is Not a Slur. Here's What It Actually Means | Guests: Missy Robertson & Carol Roth | 3/16/23” Glenn Beck Program, March 16, 2023. See, especially, the interview with Carol Roth, in the third hour segment. 

·       “Bank Runs Feared Amid SVB Crash; Domino EffectCould Roll Through Economy” Joshua Philipp on Crossroads for EpochTV, March 13, 2023. 

·       “Fed Tries to Stop Unfolding Bank Crisis;Illegal Immigrants Cost US Health Care System Billions per Year” Joshua Philipp on Crossroads for EpochTV, March 14, 2023. 

·       “Banks Linked to Cryptocurrency CommunityCollapse: Could New Regulations Have Prevented This?” by Jeff Carter for Epoch Times, March 13, 2023.     

·       “Tucker Carlson: This is why our big banks areincompetent” Tucker Carlson Tonight, March 13, 2023. 

·       “Tucker: This was a disaster for America” Tucker Carlson Tonight, March 15, 2023. 

·       “The End of Silicon Valley (Bank)” Stratechery blog, March 13, 2023.