Tag Archive for: bank run

What Is Undermining the Banks? 

April Fools

April 1, 2023  First, it was the crypto-focused Silvergate Bank. Then it was Silicon Valley Bank. And immediately after, Signature Bank. Silvergate and Signature could be dismissed because, well, crypto. But Silicon Valley Bank is something entirely else. It was older, and much larger. And a mainstay of high-tech, venture-funded startups for many decades.  Then […]

Why Can’t Banks Raise Their Rates on Deposits?

Why Can’t Banks Raise Their Rates on Deposits?

As the Federal Reserve has hiked rates from 0% to over 4.75%, the average interest rate on bank deposits has remained low, around the FDIC’s national average for savings accounts of 0.37%. This has led many to ask the simple question.   Why aren’t banks raising the interest rate on deposits?   The Hotel California Banking System  […]

Did the Fed just Pivot?

Did the Fed just Pivot

Last week, we had this to say about the implications of SVB’s collapse…  Everyone in the market has to think about an unpleasant reality and come to grips with it. They have to consider the risks of things that previously they may have thought absolutely safe. Such as bank deposits, and Treasury bonds (and government-guaranteed […]

What Caused the Collapse of Silicon Valley Bank?

The Collapse of Silicon Valley Bank

You can listen to an audio summary of this article below. Silicon Valley Bank (SVB) collapsed and was then seized by the California Department of Financial Protection on Friday, March 10. This came after a frenetic two days, when the bank announced a big loss, tried to raise capital, and then faced an accelerating run-on-the-bank. […]

Socialism and Gold

Socialism and Gold Most people assume that the central bank prints money when it buys bonds. They further assume that this increase in the quantity of money causes an increase in the general price level. And, this leads them to assume that the value of the money is 1 / P (P is the general […]

Why Duration Mismatch Will Always Fail

Duration Mismatch

I have written a number of pieces on fractional reserve banking and duration mismatch.  I have argued that the former is perfectly fine, both morally and economically, but the latter is not fine.  I have dissected the arguments made against fractional reserve banking, and pointed out that it is nothing more than a bank lending […]