The banking crisis is like a brick thrown into our economic pond. Busted banks don’t just sink silently to the bottom, never to be heard of again. Their plunge sends ripples out across the entire surface that wash into every financial inlet of our lives.
If you think this has nothing to do with you because you didn’t invest in Silicon Valley Bank or keep an account there, think again. The spreading circles of its demise will splash you if you merely feel the pinch of high interest rates or buy groceries.
Thanks, President Joe Biden!
Why? Because his policies are to blame.
Start with the most egregious and characteristic thing the Biden gang did in response to SVB, which was to exceed its authority and what the law prescribes or allows (as it did, also, forgiving over $500 billion of student loans). Biden and Treasury Secretary Janet Yellen ignored the $250,000 upper limit on secured deposits and, to “stop the contagion,” implicitly guaranteed all $17.6 trillion deposited at U.S. banks. This put Washington on the hook for twice as much as the Federal Reserve actually has.
It means, as has been noted, that depositors are freed from market discipline — they can’t lose their stash — so they needn’t be careful where they put their money. They’ll go to banks that offer big rewards by taking big risks. This is a short-term rescue at the cost of long-term instability.
The damage reaches wider. With no upper limit on the number of dollars that might need printing, the greenback will weaken, inflation will persist, and the Fed will have to make dollar assets more attractive with higher interest rates for a longer time, which makes recession more likely.
https://www.washingtonexaminer.com/opinion/the-ripple-effect-of-joe-bidens-mismanagement
If you think this has nothing to do with you because you didn’t invest in Silicon Valley Bank or keep an account there, think again. The spreading circles of its demise will splash you if you merely feel the pinch of high interest rates or buy groceries.
Thanks, President Joe Biden!
Why? Because his policies are to blame.
Start with the most egregious and characteristic thing the Biden gang did in response to SVB, which was to exceed its authority and what the law prescribes or allows (as it did, also, forgiving over $500 billion of student loans). Biden and Treasury Secretary Janet Yellen ignored the $250,000 upper limit on secured deposits and, to “stop the contagion,” implicitly guaranteed all $17.6 trillion deposited at U.S. banks. This put Washington on the hook for twice as much as the Federal Reserve actually has.
It means, as has been noted, that depositors are freed from market discipline — they can’t lose their stash — so they needn’t be careful where they put their money. They’ll go to banks that offer big rewards by taking big risks. This is a short-term rescue at the cost of long-term instability.
The damage reaches wider. With no upper limit on the number of dollars that might need printing, the greenback will weaken, inflation will persist, and the Fed will have to make dollar assets more attractive with higher interest rates for a longer time, which makes recession more likely.
https://www.washingtonexaminer.com/opinion/the-ripple-effect-of-joe-bidens-mismanagement
