Carol Roth Joins for an In-Depth Discussion on the Economy


Exactly happened with Silicon Valley bank was signature bank, some of the other big regionals, first republic, what is this fear factor? And is it contained by way of what the fed did? Yeah, the way I like to break it down particularly for Silicon Valley bank is that I feel like the fed was the arsonist that burnt the house down and then they wanted to stand by with a bucket of water and throw it in the house and go, oh look, we're helping. We're helping to put out the fire. So this all goes back to the fact that we have had easy money policy basically for the last 15 years. We got a little bit of a move towards raising interest rates and a theoretical pause on QE and then COVID came about and we had quote unquote emergency policy. Stimulated the economy printed trillions of dollars and there was all of this money intentionally sloshing around the economy. So in Silicon Valley that meant a lot of funding for startups and they went and because of different deals that are made out in Silicon Valley, a lot of them put their deposits with Silicon Valley bank. Which normally for a bank is a great thing to do, but after 15 years of easy money, they didn't have enough people to lend to. So they had more deposits coming in, but they couldn't put that minded work the way that a bank usually does, you know, through making loans. So they said, okay, well, we have to do something with this money. We want to try and get some yield. And here's where the really weird boneheaded management thing happened is they decided to put that into quote unquote safe securities, treasury mortgage backed securities. But lock them up not for 6 months or a year, even 5 years. They locked them up for ten years. I know. Which makes no sense because the head of silicon valley bank sits on or used to sit on the San Francisco fed. So the idea that the fed was never going to have to raise rates again. It was insane. But

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