America’s banks are missing hundreds of billions of dollars
1. The government requires banks buy their debt and hold it as reserves because it&#x27;s considered the safest investment.<p>2. The government decides that, oops, it printed too much money in 2020&#x2F;21 and is causing inflation, so it raises rates very quickly.<p>3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago.  Why would anyone want to buy those old treasuries near face value now?<p>4. The old treasuries decline 30-40% in present value.  Oops, they&#x27;re not so safe after all if you need your money back before maturity, which is often decades away.<p>5. A bunch of VCs decide they&#x27;d like their money back today, not in 20 years.  A bank doesn&#x27;t have it on hand, so it goes under.<p>6. Banks going under is bad look, so the government decides to inject massive liquidity into banks, now finding itself both tightening and loosening fiscal policy simultaneously.<p>SVB is certainly not blameless here, but the Fed&#x27;s money printer and the government&#x27;s wildly excessive stimulus has to be one of the worst policy errors since the 2007&#x2F;08 financial crisis.