I'm dubious that the "Fed's money printer" had much of an effect on inflation. It certainly didn't cause the SVB or other banks to go under. The rate increases did that... in this case.
I don't think the particular path matters much. People tend to moralize banking, and post failure we tend to hunt for moral culprits. But... the historical fact is that banks fail sometimes, under all possible regulatory and commercial regimes. We have hundreds of years worth of evidence.
Banks have failure scenarios. The concept of a bank which takes deposits and invests them while maintaining 0% risk to depositors does not, and has never existed. We need to decide if money in the bank proverbial gold, or is it more like shares in a company? We just can't have both.
> I'm dubious that the "Fed's money printer" had much of an effect on inflation. It certainly didn't cause the SVB or other banks to go under. The rate increases did that..
The rate increases were an attempt to combat the inflation caused by the massive increase in money supply during the pandemic due to the government stimulus. There were no new goods or services justifying all the stimulated activity. SVB was drunk on the seemingly permanent zero interest rates (like everyone else) and invested in long term government bonds. Then the unthinkable happens—rate increases for the first time in over a decade, and those investments go boom. This is all about people getting used to cheap money.
> I'm dubious that the "Fed's money printer" had much of an effect on inflation
In all of modern history around the world when has printing more money not resulted in inflation. Let's look at Zimbabwe and other countries that went nuts printing money.
I'm dubious that the "Fed's money printer" had much of an effect on inflation. It certainly didn't cause the SVB or other banks to go under. The rate increases did that... in this case.
I don't think the particular path matters much. People tend to moralize banking, and post failure we tend to hunt for moral culprits. But... the historical fact is that banks fail sometimes, under all possible regulatory and commercial regimes. We have hundreds of years worth of evidence.
Banks have failure scenarios. The concept of a bank which takes deposits and invests them while maintaining 0% risk to depositors does not, and has never existed. We need to decide if money in the bank proverbial gold, or is it more like shares in a company? We just can't have both.