Tucker looks at the recent bank collapses, how they went wrong and what the government’s potentially going to do about it. Certainly not solve the problem or hold anyone accountable. Highlights include:
“In a normal, non-distorted capitalist economy, companies become valuable, more valuable when they produce more goods and services that people want to buy.”
“But in an economy controlled by monetary policy run by the federal reserve, companies become valuable when interest rates declined. So, for 13 years interest rates remained near zero. In retrospect, now that it’s ended, this was crazy behavior. These were emergency measures declared by the federal reserve in 2008, but the never ended. And because they never ended for 13 years, the American economy was distorted beyond recognition in ways too numerous to count.”
“There was also a problem that you didn’t hear about with low interest rates. If interest rates are at zero, how do you get meaningful returns on your money? This was a problem that virtually every investor faced for more than a decade, very much including the banks. At some point, investors became tempted to make very risky bets. If they wanted to produce returns, they had to.”
“One of the risky bets that banks made was loading up on long term treasury bonds from the US government as a surrogate for cash…But that worked fine as long as interest rates remained low. But once interest rates rose as a response to inflation, as they were always going to do, nothing lasts forever, including zero interest rates, once that happened those bonds were worth less than the banks had paid for them, and so the banks began to fail.”
“You’re also seeing, revealed for everyone to see, the other effect of 13 years of artificial, fed-driven prosperity, and that is a lot of silly, frivolous people in charge.”
“How did this happen, can we get an explanation for that, don’t we have regulators? And how did those regulators, since we’re pretty confident they exist on taking big salaries, how did they miss the fact that SVB was insolvent, apparently, for months, and not in some complex credit default swap way you’re gonna spend 5,000 words trying to understand, but in a really simply way that’s easy to understand? They’re liabilities were bigger than their assets, very simple. How did nobody notice that?”
“Remember that after 2008, the Obama administration, Eric Holder, swooped in and imposed DEI — Diversity, Equity and Inclusion standards — on the entire financial sector, and that’s one of the main reasons our big banks are now increasingly incompetent and also one of the reasons Americans are so divided by race. Ideologues used the 2008 bank bailout to kill American meritocracy. That’s a big step, mostly unacknowledged, but we’re living with its consequences. So, you have to ask yourself, what are they gonna’ do this time?”
“Well, we know we’re about to see bank consolidation, big banks eating little banks, and that means less competition, more consolidation, means more government control. So, what are they going to do with that control? Well, all things being equal, if people don’t start making a lot of noise and exerting an awful lot of pressure, it’ll mean digital currency, a currency that politicians control… You think that’s not coming? Of course it’s coming.”
“What we do know is that the democratic party, the Biden administration sees this crisis as a means of expanding their control. And we know this because in a recent zoom call with the fed, treasury department and other financial regulators with members of Congress, Senator Mark Kelly of Arizona asked whether their was a program in place to censor social media posts that could lead to a national run on banks.”
Watch the video below and give us your thoughts in the comments:
