Posted on 03/13/2023 10:45:51 AM PDT by SeekAndFind
As America's economic turmoil continues to spread fear among consumers and depositors, U.S. Rep. Thomas Massie (R-KY) took to Twitter to explain how the clumsy hand of government — specifically the Federal Reserve — enabled both the "malfeasance" and "failure" of Silicon Valley Bank.
First, Massie explained the Fed's role as "Santa Claus" by setting and keeping interest rates "artificially low" for years. That spurred economic growth and "nudged" those with cash to spend into venture capital which in turn necessitated an institution like Silicon Valley Bank.
Let’s review the Federal Reserve Bank’s many roles, & how each of them enabled the SVB failure/malfeasance:
(1) Santa Claus.
By keeping interest rates artificially low, FED stimulated the economy, & nudged those with capital into the VC space creating demand for a bank like SVB.— Thomas Massie (@RepThomasMassie) March 12, 2023
Second, the Kentucky Republican outlined the Fed's "arsonist" behavior demonstrated by its actions that "created $5 trillion out of thin air" for Congress to spend...that did not, in fact, exist.
(2) Arsonist.
FED created $5 trillion out of thin air so Congress could inject this money into the economy. There weren’t 5 trillion dollars to borrow during COVID, and certainly not at the low rates imposed by FED. Inflation was off to the races thanks to dilution.— Thomas Massie (@RepThomasMassie) March 12, 2023
Third, the Fed then changed hats from "arsonist" to "firefighter," and "came to the rescue to fight inflation by rapidly increasing interest rates" to their highest level since the 2008 financial crisis. Consequently, venture capital startup deposits to Silicon Valley Bank slowed down while the now-failed bank's assets lost value.
(3) Firefighter.
After setting the blaze, FED came to the rescue to fight inflation by rapidly increasing interest rates. As a result, net VC startup deposits into SVB slowed, while assets held by SVB (long-term low-interest government debt) became less valuable.— Thomas Massie (@RepThomasMassie) March 12, 2023
Fourth, the Fed is now likely to act as a "trauma doctor," Massie explained, which will see the Fed put its "Santa" hat back on again with the same consequences.
(4) Trauma Doctor.
Will the FED play a role in bailing out SVB depositors and other banks? Possibly by lowering rates, buying their holdings at above value, or creating more money for bailouts. None of these are free. But the FED becomes Santa Claus again and inflation rages on.— Thomas Massie (@RepThomasMassie) March 12, 2023
This equation, Massie argued, is why Americans "would be better off if the Federal Reserve Bank...did not exist to socialize the risks of insiders while distorting our economy, destroying jobs, and devaluing our currency."
We, the American people, would be better off if the Federal Reserve Bank, an instrument of the very wealthy and connected, did not exist to socialize the risks of insiders while distorting our economy, destroying jobs, and devaluing our currency.— Thomas Massie (@RepThomasMassie) March 12, 2023
The Woke’s slush fund bank
The decision to make all depositors whole by decree,causes the US to take on every bank deposit as a new sovereign risk. The only. Way the US treasury has to pay those guarteens is to print more money or float more government debt. The taxpayers will pay for it with more inflation or more taxes. Banks will be further incentivized to take higher risks and depositors will chase them looking for higher interest rates.
Who wants a reserve currency tied to such irresponsible policies.
what point are you trying to make?
Nothing could be more basic, but chief financial officers are usually subject to verbal stoning in meetings for pointing that out fact.
Massie, still wanna know the identity of the Dem Senator who asked about censoring social media during that call last night...
Wasteful spending is always wrong including the spending during COVID.
Inflation is here because of the wasteful spending that started in March of 2020 in the Trump Administration and continued into the Biden Administration.
More than ever there needs to be a forensic audit of the Fed. At the conclusion of the audit, prosecute every criminal involved in both sides of transactions. Finally, end the Fed.
thank you ...
Massie showing brains and adroitness about the functionings of government and the economy on a level far above his peers.
Go Massie.
Yeah, well...sometimes Trump is retarded.
Reminds me that Bernie Madoff’s niece was/is married to an SEC staff.
Also, during the Clinton and Obama years, they forced the Fed to keep interest rates at zero. That way all of the annual interest payments on the debt were not as large. Not sure why the Fed was allowed to raise rates, unless Cloward Piven is in play.
Gregory W. Becker, President, Chief Executive Officer & Director, SVB Financial Groupon is also on the board of Federal Reserve Bank of San Francisco.
Massie is a member of an institution that can’t produce a budget, where receipts and outlays are “in the ballpark” of each other.
However, Massie does have an overall voting record that I approve of. He votes the ‘right way’ on a variety of issues.
Huh? Rates weren't anywhere near zero during Clinton's terms.
🙄 cringeworthy text
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