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Crisis: partially averted
Money matters continue taking up a lot of space in news pages, as analysis of the demise of Silicon Valley Bank finds it weighed, measured and wanting. Banking and monetary theory is a dizzyingly difficult thing to wrap your head around at any time, but boy howdy, there’s a plenty of theories about this collapse!
Many are pointing to the penchant for tech companies to embrace every woke agenda and diversity, often at the expense of commonsense policies. It has been noted that SVB put a lot of money towards progressive causes and focused on hiring diversely, while at the same time going without a risk manager for 8 months.
Some say the insularity of Silicon Valley bros created a herd mentality, which triggered the bank run in the first place. Other commentary suggested that Since the Fed only insures deposits up to $250K, maybe multi-million dollar accounts should be spread across banks. Or maybe the Fed took its eye off the ball – SVB should have failed a number of financial stress tests but was given clean bill of health by auditors just weeks ago. And it goes on..
At City Journal, Allison Schrager writes that Silicon Valley is a strange place, where starting a company with no real expectation of turning a profit has been normalized. “There were many bad companies and outright frauds getting funded…Someday, it will seem crazy that so many high-profile tech firms plainly stated in their investment prospectuses before going public that they had never made a profit, and perhaps never would, and yet still had successful IPOs. This could happen only because interest rates were extremely low.”
Speaking on the Spectator podcast, Bloomberg journalist Joe Weisenthal asked some big questions. If government money is used to recompense customers when banks fail, then it is taxpayer’s money which is bearing all the risk. Weisenthal says if the government is now the backstop security for private banks, then are they really public utilities? Like Theseus’ ship, how much of a bank’s money can be guaranteed with government funds before it is no longer a private bank? Maybe we should all open checking accounts with the Fed and cut out the middle man!
Some would say that a single central bank is the aim. Indeed, Treasury secretary Janet Yellen stunned GOP lawmakers by saying the Fed would guarantee deposits in big banks, but would not commit to bailing out regional ones. So why put money in a local bank at all? The message was received with shares in smaller banks plummeting.
Which brings us to the culprit a lot of people are pointing to – government meddling. Nichola Gelinas, also writing at City Journal notes that it’s hard to see that the Fed and Treasury have learned much since the global crisis of 2008. She says that the Fed’s plan back then was to jumpstart the economy by “spurring…cheap lending and borrowing” forgetting that creating cheap money was the cause of the economic crash in the first place. Yet, printing money was a once again a strategy during the covid economy and the fall out from that is likely to hit some time in the future.
So, what if the world economy burns to the ground? While our leaders insist “all is well” and worldings look to their gods of mammon for safety, pray to your Savior who said not to worry about your life: “your heavenly Father knows that you need all these things.”
More than that, Christians have a more important ledger in mind than one which tracks dollars and cents. Lent is a reminder that Jesus counts our tears, but blots out our transgressions. The time of eternal Jubilee – all debts forgiven – started at Calvary, the surety of which is coming soon to the skies near you. As Rev Fisk often reminds us, Jesus Christ will not be long in wrapping up this fallen world, including all the merchants and their gold. He is risen and you are paid for – in full.