I get that other countries are also doing this but “oh this bag is equities is safe because it’s diverse” proving to be false all the time feels like a good argument against this logic.
Granted if SVB had all these bonds that would pay out “guaranteed” that feels pretty strong
What I was glibly saying was that “we have securities X Y and Z that are in aggregate worth T dollars at current market prices, thus this is like we have T liquid dollars” shortcuts have lead to so many problems when macro economics happen.
I am being glib, though I am very wary of the safety of things that aren’t just like… cash. “We haven’t had to take over a bank for 2 years!” Isn’t as much of a vote of confidence in a system as I’d like.
I’d be curious to hear why such a cadence (let’s say 15 years) is an acceptable price to pay in your book. Do you think this system leads to such substantive increases in American standard of living that it’s worth giant banks toppling do often?
Granted if SVB had all these bonds that would pay out “guaranteed” that feels pretty strong