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The United States recently suffered the second largest bank failure in the country's history. The consensus view is that Silicon Valley Bank made a huge mistake by borrowing short term and then parking money in long-term bonds. When interest rates rose, assets lost value, and SVB was put in a perilous position.President Joe Biden promises there will be a "full accounting" of the situation and that everyone will be held "accountable." But that would mean the president taking responsibility for the reckless governance that helped create the environment that made this possible. The Fed wouldn't have been compelled to aggressively raise interest rates if Biden had acted more like a responsible statesman rather than a cynical partisan.Let's recall that virtually the entire left-wing political infrastructure — media, politicians and expert class — was activated to dismiss the concerns of those who warned that inflation was a threat. The reason was obvious: Democrats wanted to cram through as many long-term spending proposals as possible while they held both houses. That had to be done in two years' time. And it had to be done with the support of Joe Manchin, a senator who would occasionally feign concern about spending.In 2021, Biden signed the $2 trillion so-called American Rescue Plan, indiscriminately sending checks to millions even as COVID lockdowns were winding down. This, after issuing a number of presidential edicts limiting affordable fossil fuels. (With some Republican help, Democrats would later pass a $715 billion green "infrastructure" bill.) The Fed, meanwhile, kept rates at zero, pumping an already hot post-lockdown with billions. Inflation began spiking.
Acollection of seemingly random crises can spell out a sinister “conspiracy theory” when you consider their connections and where they are leading. An overplayed plot? Perhaps, but how many so-called conspiracy theories have proven to be reality recently?First, the world economy shut down with the COVID lockdown. Manufacturing stopped and capital construction projects were put on hold. No one was making anything, and consumers were buying very little. The government injected huge amounts of cash to stimulate spending, even though there wasn’t much to spend it on: witness supply chain issues. This cash was created out of thin air by the Federal Reserve. Household savings rates rose to new highs. Personal and commercial bank deposits soared. Consider banks, a confounding inversion of logic for most consumers. While it seems odd to think that a loan is an asset and a deposit is a liability, it makes sense when you realize that making loans is the method banks use to make money. Every time a bank takes in a deposit, they try to loan that money out as quickly as possible to put it to work making income for the bank. If no one is applying for loans, the bank invests the money in bonds to earn a little interest.
On Monday’s broadcast of the Fox Business Network’s “Evening Edit,” Rep. Dan Meuser (R-PA) reacted to reporting from The Wall Street Journal that was confirmed by ABC News that the Federal Reserve knew of problems with Silicon Valley Bank (SVB) back in 2019 by pointing out that SVB doubled in size after these warnings and stating that Federal Reserve regulators failed to do their jobs.
