The Impact of Bank Bailouts and Runs on the Economy: Insights from Silicon Valley Bank – The Yaron Brook Show

by | Jun 7, 2023 | Bank Failures | 7 comments

The Impact of Bank Bailouts and Runs on the Economy: Insights from Silicon Valley Bank – The Yaron Brook Show




00:00 Intro
01:30 Hysteria about Silicon Valley Bank
02:45 Show Outline
06:04 Personal Stake
07:30 What Happened
07:55 Silvergate
09:55 Silicon Valley Bank
14:55 Long term securities problem
19:20 Raising Capital
20:08 Bad Communication
20:28 Panic
24:12 “Panic” has an implication of irrationality. Do you think it was wrong to withdraw funds from SVB on Thursday?
29:41 Challenge
31:58 Sentiment towards startups
34:58 Uncertainty
36:30 Risk of Contagion
38:00 Too Big To Fail Banks
39:50 Catch
43:21 No Diversification
50:15 What Will Happen
1:00:48 Market Solutions

Live Questions:
1:05:59 What do you think of credit unions? Are banks better? Are credit unions worth it for most people or should they use banks instead?
1:07:40 Hi Yaron, A leftist friend suggested “robertreich, saving capitalizm book”, what you think about that book, why too many thinkers try to stick there ideas to capitalism ? Saving Capitalism, smart alterism …. etc ?
1:09:18 My company had 0.5 billion at Sillicon Valley, will they get it back ? they filed 8-K, does that help ?
1:11:10 Given that SVB has branches in other countries, such as Britain, with their own banking laws, how will that impact what happens?
1:13:03 Why the Feds doesn’t stop increasing interest rate, after they saw the disasters effect of infect hike ?
1:15:19 There’s a theory that in the central bank era, after Breton Woods, due to the need to convert to US$, global trade & the US$’s value is now driven by the supply & liquidity of US$ debt & derivatives overseas. Any thoughts?
1:17:50 Did you see that SVB’s head of risk mgmt was a seemingly woke hire? Looks like a good example of “go woke, go broke.” I just jumped in, sorry if you mentioned it already.
1:19:38 Why are intellectuals so resentful and afraid of the human soul? Why all the concerted efforts to crush it?
1:20:28 How much is a book review of The Fiat Standard by Safidean Ammous?Did you see John Cochran full length interview the other day with Peter Robinson about his new book on the fiscal theory of money?
1:21:22 Will R. Wolff call this a failure of capitalism?
1:22:42 Q. Hi Yaron. Are banks required to mark to market their bond and investment portfolios?
1:23:12 So, the bottom line – should I be worried about contagion tomorrow? Will social media fuel a panic bank run?
1:24:34 What about Bitcoin?
1:26:40 Statists misunderstand risk as predictability and therefore promote conformity rather than the reward as profits.
1:27:26 Switzerland allows for doctor assisted suicide provided it is for “non selfish reasons”. What does that even mean? Not wanting to suffer and live in misery has to be “non selfish”?
1:29:18 China’s buying a lot of gold. Do you think this will shelter them in the event of western sanctions? Like if China invaded Taiwan.
1:31:34 Happy to support your work. Appreciate it greatly. Do you have any lesser known works on objectivist epistemology you’d recommend?
1:32:09 Have you considered doing your show on Twitter Spaces?
1:32:27 Likelihood that the interest rate will go down?
1:32:52 Celebrating my own weekly Sunday evening YouTube series … three years as of this month. Still a rookie compared to professionals like yourself, but it’s been great fun, and the more reasonable voices, the better.
1:33:37 Meanwhile, thank you for all of the information, inspiration, and outstanding content. And don’t ever stop!

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1:33:45 Outro

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#bankrun #bailout #siliconvalley #banking #morality #ethics #economics #capitalism ​#Objectivism #AynRand #politics…(read more)


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In the wake of financial crises and recessions, the government often turns to bank bailouts as a solution. But what are the implications of these bailouts and how do they affect the economy?

One of the most significant risks associated with banks is the possibility of bank runs. Bank runs occur when a large number of customers withdraw their deposits from a bank simultaneously, causing a shortage of funds. This can be triggered by a loss of faith in the bank’s ability to return the funds, or by rumors and speculation.

In response to bank runs, governments often resort to bank bailouts as a means of averting financial collapse. This involves injecting capital into the banks in order to shore up their finances and assure customers that their deposits are safe.

The impact of bank bailouts on the economy is somewhat controversial. Proponents argue that they are necessary to prevent systemic risk and ensure the stability of the financial system. Opponents, on the other hand, argue that bailouts can encourage reckless behavior among banks by providing a safety net that cushions them from the consequences of their actions.

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One example of a bank bailout that has proven to be highly controversial was the 2008 bailout of major Wall Street banks. The bailout was intended to save the financial system from collapse after the subprime mortgage crisis, but critics argued that it only served to reward and protect the very institutions whose risky behavior had caused the crisis in the first place.

While bank bailouts are often the go-to solution for governments facing potential bank runs, there are other options available. One potential solution is to introduce banking regulations that prevent the types of risky behavior that can lead to financial instability. Some proponents of this approach argue that it is more effective in the long term than bailouts, and also helps to promote a more stable financial system overall.

In conclusion, bank bailouts are a complex and controversial issue with far-reaching implications for the economy. While they can play an important role in averting financial crises and preventing bank runs, their long-term impact on the stability of the financial system is a matter of debate. Ultimately, the best solution may be a combination of regulations and bailouts that promote stability and encourage responsible behavior among banks.

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7 Comments

  1. Yaron Brook

    Outline:
    01:30 Hysteria about Silicon Valley Bank
    02:45 Show Outline
    06:04 Personal Stake
    07:30 What Happened
    07:55 Silvergate https://youtu.be/znqp_ewQRMw
    09:55 Silicon Valley Bank https://youtu.be/IO0yr3XIHhY
    14:55 Long term securities problem
    19:20 Raising Capital
    20:08 Bad Communication
    20:28 Panic
    24:12 “Panic” has an implication of irrationality. Do you think it was wrong to withdraw funds from SVB on Thursday?
    29:41 Challenge
    31:58 Sentiment towards startups
    34:58 Uncertainty
    36:30 Risk of Contagion
    38:00 Too Big To Fail Banks
    39:50 Catch
    43:21 No Diversification
    50:15 What Will Happen
    1:00:48 Market Solutions

    Live Questions:
    1:05:59 What do you think of credit unions? Are banks better? Are credit unions worth it for most people or should they use banks instead?
    1:07:40 Hi Yaron, A leftist friend suggested "robertreich, saving capitalizm book", what you think about that book, why too many thinkers try to stick there ideas to capitalism ? Saving Capitalism, smart alterism …. etc ?
    1:09:18 My company had 0.5 billion at Sillicon Valley, will they get it back ? they filed 8-K, does that help ?
    1:11:10 Given that SVB has branches in other countries, such as Britain, with their own banking laws, how will that impact what happens?
    1:13:03 Why the Feds doesn't stop increasing interest rate, after they saw the disasters effect of infect hike ?
    1:15:19 There’s a theory that in the central bank era, after Breton Woods, due to the need to convert to US$, global trade & the US$’s value is now driven by the supply & liquidity of US$ debt & derivatives overseas. Any thoughts?
    1:17:50 Did you see that SVB's head of risk mgmt was a seemingly woke hire? Looks like a good example of "go woke, go broke." I just jumped in, sorry if you mentioned it already.
    1:19:38 Why are intellectuals so resentful and afraid of the human soul? Why all the concerted efforts to crush it?
    1:20:28 How much is a book review of The Fiat Standard by Safidean Ammous?Did you see John Cochran full length interview the other day with Peter Robinson about his new book on the fiscal theory of money?
    1:21:22 Will R. Wolff call this a failure of capitalism?
    1:22:42 Q. Hi Yaron. Are banks required to mark to market their bond and investment portfolios?
    1:23:12 So, the bottom line – should I be worried about contagion tomorrow? Will social media fuel a panic bank run?
    1:24:34 What about Bitcoin?
    1:26:40 Statists misunderstand risk as predictability and therefore promote conformity rather than the reward as profits.
    1:27:26 Switzerland allows for doctor assisted suicide provided it is for “non selfish reasons”. What does that even mean? Not wanting to suffer and live in misery has to be “non selfish”?
    1:29:18 China's buying a lot of gold. Do you think this will shelter them in the event of western sanctions? Like if China invaded Taiwan.
    1:31:34 Happy to support your work. Appreciate it greatly. Do you have any lesser known works on objectivist epistemology you’d recommend?
    1:32:09 Have you considered doing your show on Twitter Spaces?
    1:32:27 Likelihood that the interest rate will go down?
    1:32:52 Celebrating my own weekly Sunday evening YouTube series … three years as of this month. Still a rookie compared to professionals like yourself, but it's been great fun, and the more reasonable voices, the better.
    1:33:37 Meanwhile, thank you for all of the information, inspiration, and outstanding content. And don't ever stop!

    1:33:45 Outro

  2. TeaParty1776

    CNN asked socialist idealist, Bernie Sanders, for his view on the bank failures.

  3. FriendKassi!

    Great discussion on bailouts, thanks for the clarification. Hope this mess is resolved soon

  4. macbig

    Amazing video thank you Yaron

  5. John Davids

    You make so little on interest that I am going to withdraw maybe 20% of my cash reserves as soon as the bank opens in the morning, maybe more. I do not want to be left out in the cold. Cash is king and numbers in a bank statement are just that – numbers. What you make isn't worth the risk. I have been thinking about it for a while and this just triggered me.

  6. paul c

    Great job on this.

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