Ep. 40 - The Collapse of SVB: What Really Happened?
The second-largest bank crash in American history just happened. Are we facing an economic collapse? Let’s talk about that! In this episode, we dive right into the recent collapse of Silicon Valley Bank, delving into the economic implications and far-reaching effects of the situation. You’ll discover how the inner workings of banks on a large scale and what series of events led to this pandemonium. Cut through the rumors and misinformation of the media by tuning in here to find out the true scope of this event and address questions like: What does it mean for mortgage rates? How will long-term inflation be affected? Are there any further steps that the Federal Reserve needs to take?
Jump in and find out what really happened!
[00:01 - 07:11] Run on Silicon Valley Bank causes the second-largest collapse in US banking history: How deposits and bank runs work
[07:12 - 21:26] SVB seized by FDIC—let’s look at this bank and how the crash happened
[21:27 - 25:20] Examining the impact of the collapse on mortgage rates, inflation, and Fed decisions
[25:21 - 31:18] The Federal Reserve's 'Dangerous Game of Poker': analyzing the SVB collapse and its ripple effect on the economy
[31:19 - 37:01] Fed forced to punt on policy after FDIC shut down—is quantitative easing coming back?
[37:02 - 43:58] Kicking the can down the road as we face the threat of ‘stagflation’
[43:59 - 50:47] How the run on the SVB accelerated the housing market and the fragility of the economy
Quotes:
"There's this notion that when you make a deposit, the money's there, but we know that banks treat deposits like a liability. They have to make money on the money you put in there. And we, and the banks, have to pay you money on that money." - Quinton Harris
"You know, you turn on any news channel, especially, you know, CNN, CNBC, or something that's financial related. I mean, this is what they're going to talk about all day long, all day." - Quinton Harris
“Until the dust settles, I think the stock market is going to be the one to bare the brunt of this.” - Quinton Harris
“The Fed can’t solve this if the only solution is messing with interest rates… The pendulum of raising and lowering interest rates is not going to fight inflation.” - Daniel Halverson
"Nobody wants to go first when it comes to trying to solve this. No one wants to be the first one to say, ‘Well, this is what I think we should cut. Boom!’ You just lost a large subset of voters when you say that." - Quinton Harris
Resources Mentioned:
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