The Capitalist Investor - Episode 169 This week’s episode of The Capitalist Investor features the three amigos discussing the recent collapse of Silicon Valley Bank. The Federal Government had to intervene as the bank had a high concentration of large depositors, many of which were tech companies. Unlike other banks, SVB had a very high concentration of a single area of focus, like Venture Capital This differs from other banks that are more accustomed to having deposits of firms and consumers with different backgrounds and professions.Silicon Valley Bank Blowup & Your MoneySVB recently took large deposits of money and invested in long-duration bonds over the past decade. However, with the recent rise in interest rates, the asset prices of these bonds have gone down, resulting in a significant financial loss for SVB. This bad management of deposits resulted in a loss of billions of dollars that was left unhedged against. That is complete moral incompetence and a moral hazard.What should the Federal Reserve response be in responding to the default of Silicon Valley Bank in the wake of rising inflation? One of the biggest concerns is the concern around a contagion and the strength of the overall banking system. The system has changed over the years as the banking system uses numerous financial instruments, such as derivatives and options, and no longer just the usual hand the money over to the bank and then loan it out to someone else. This amount of complication within the banking world has made the extremes more extreme when things go wrong. This also leaves much less room for error.What does this mean for Crypto Currency? Essentially these faults in the banking system are the exact reason that crypto came into light in the first place. The free markets are no longer free when the government intervenes, creating more extreme cycles. When things go wrong, consumers and companies want bailed out. But when you reward bad behavior, you get bad results.0:00:00 Topic: Silicon Valley Bank Collapse and the Federal Reserve’s Intervention0:02:23 Impact of Rising Interest Rates on SVB’s Investment Strategy0:04:45 Analysis of Silicon Valley Bank’s Risk Hedging Practices and Implications for the Banking Sector0:06:44 Discussion on the Complexity of the Banking System and the Rise of Cryptocurrency0:08:32 Discussion on Silicon Valley Bank’s Risk Management Practices and Impact on Woke Culture0:13:49 Analysis of the Impact of Regulatory Rollbacks on the US Economy0:15:45 Analysis of the Impact of the Financial Crisis on the Banking and Investment Industries0:18:50 Heading: Balancing Act: The Impact of Inflation on Middle Class America0:22:07 Conversation on Capitalism and the American Dream0:23:31 Discussion on Global Economic Crisis and Debt to GDP Levels0:26:10 “Exploring the Financial Risks of the End of the World and the Tech Sector” Connect With Mark TepperTwitter: @MarkTepperSWPFollow Mark on LinkedInSend Mark a message hereThe SWP Connect YouTube ChannelConnect With Ryan DobrokaTwitter: @DobrokaRyanFollow Ryan on LinkedInSend Ryan a message hereThe SWP Connect YouTube ChannelConnect with Derek GabrielsenTwitter: @DerekGabrielsenFollow Derek on LinkedInSend Derek a message hereCheck out Derek’s YouTube channel!Connect With Luke LloydTwitter: @LloydBoyLukeFollow Luke on LinkedInSend Luke a message hereThe SWP Connect YouTube ChannelConnect with Tony ZabiegalaTwitter: @TonyZabiegalaFollow Tony on LinkedInSend Tony a message hereThe SWP Connect YouTube channel!Send your questions and comments to us at info@SWPConnect.com
