Why the Silicon Valley Bank Collapse is Worse Than You Think

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Why the Silicon Valley Bank Collapse is Worse Than You Think

March 20th, 2023 | by Gunner Steele

If there is one thing you know for sure—whatever they tell you on the news is NEVER RIGHT. If we want to stop being propagandized, we need to collectively abandon "legacy media" and find out facts and truth on our own. It also helps to have a healthy dose of good 'ol common sense—the kind that makes you skeptical of whatever the "powers that be" claim.

Because even when they are not intentionally lying to you, they are just remarkably incompetent. Just think about how the "experts" make predictions in order to either groom or gaslight the public.

For example, do you remember how Hunter Biden's dad famously insisted back in the summer of 2021, that it was "highly unlikely" that the Taliban would ever take over Afghanistan again?

Then a few weeks later, the Taliban had completely taken over the country and Americans watched in horror as we faced what could be the greatest military humiliation in our country's history—as our military choppers evacuated American staff at the embassy in Kabul and ultimately left behind billions of dollars of our military technology to our political enemies.

It's kind of like last week when Jerome Powell, the chairman of the Fed (the U.S. Central Bank), testified in a Senate Committee about interest rate hikes. You see, the Senators were concerned that they were raising interest rates too quickly.
Jerome Powell Chairman of the Fed

Jerome Powell, Chairman of the Federal Reserve Bank

And their concern is and was valid. Raising interest rates quickly is dangerous to the economy, particularly and specifically for the value of bonds. Because when you raise interest rates quickly, the value of government bonds drops rapidly.

Now before I tell you how utterly stooooooopid Jerome Powell, Chairman of the Fed's, response was, let me remind you that we had a giant economic crash when banks went belly up in the great housing crash in the years just before 2010.

Back then, the problem was that banks were giving out mortgages to people called "Subprime NINJAs." That stood for "no income, no job/assets." Obviously people with no income, no job, and no assets shouldn't be given mortgages by banks with brains, but the banks were operating without brains because the government had given them the incentive and instruction to give out these loans—so they did!

And these loans become worthless and known as "toxic assets" because they truly were worthless, and ultimately when they plummeted in value it essentially wiped out the banks who held them. This, of course, caused the Federal Government, under Republican control at the time, to rush in and bail out the banks using taxpayer money. It was brutal and it was pretty much the most destructive financial disaster in our lifetimes.

Fast forward about 15 years, and after endless investigations, blaming and finger-pointing, hearings, and the like, we came to a place where the banking system was updated and supposed to be protected from ever having something like this happen again. We even have "stress tests" and new banking regulations in place to ensure that banks would not fail again like they did back then.

Yet somehow, even without these "NINJA" loans, we just witnessed two major banks collapse last week. The first was Signature Bank and the second was Silicon Valley Bank (SVB).

So how did this happen?

Well, the new "toxic asset" is not mortgages to people who have no job and no income, rather the new "toxic asset" is US government bonds! That's pretty scary.

Silicon Valley Bank actually had a pretty strong balance sheet. Generally speaking they were pretty conservative in their lending strategy and they had $173 billion in customer deposits with "only" $74 billion in loans.

I know that sounds silly to say "only" $74 billion in loans, but most American banks lend out pretty much all of their money. By way of example, Wells Fargo recently reported having $1.38 trillion in deposits with $955 billion loaned out!

So by comparison, Wells Fargo had a nearly 70% loan to deposit ratio where Silicon Valley Bank was much more conservative at only 42%. And after being reviewed and checked by our fabulous government, they passed their "stress tests" with flying colors. Everything was supposed to be fine and dandy at Silicon Valley Bank.

But the problem was that instead of having toxic "NINJA loans," Silicon Valley Bank had $119.9 billion of its customer's money in toxic US Government Bonds! So these US Senators who asked Jerome Powell to testify before them had real reason to be concerned.

In fact, after the last financial crash due to subprime mortgages, modern banks tend to invest their customer's deposits in government bonds because it's supposed to be safe. However, now that the Fed has tightened its monetary policy as quickly as it has, this has given banks all across American more than $600 billion in unrealized losses on their bond portfolios. Now think about it—these are government bonds so that means that $600 billion is basically YOUR MONEY.

Now obviously the Fed knows this and they have access to all of this information. They know it better than anyone. Nevertheless, you'll never believe what Jerome Powell, the Fed Chairman told these Senators. He said, “nothing about the data suggests to me that we’ve tightened too much..." Wow. Just wow. This moron literally testified that nothing they were doing, particularly the rapid interest rate hikes, posed any risk whatsoever to our economy of financial system.

So what ended up happening? Well three days after Jerome Powell said this, we saw one of the largest banks in America crash and burn, then we witnessed multiple bank runs all across the country, and finally we watched the entire bond market fall. In order to restore confidence the Fed itself had to basically takeover for the job of the FDIC and guarantee the entire banking system.
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Here's the official message on SVB's website concerning how they have essentially been taken over now by the Fed through an FDIC operated "bridge bank."

There's a lot more detail to what happened that I won't bore you with here. But it's scary, dangerous, and ugly. However, the most important thing to recognize is that the reason why these banks collapsed is because our own Federal Government and central bank don't have the money to pay their bills to ourselves. We are just flat broke (because of debt). And to fix the problem of not being able to pay our bills, we are guaranteeing to ourselves that we will pay for our own debts and guarantee our insolvency to ourselves. Yeah, I know. It doesn't make any sense. It's just a bunch of nonsense and gobbledygook.

So what does all this mean in the real world? Nobody knows, though a new report predicts that close to 190 banks could face the same fate as Silicon Valley Bank. But this much should be obvious—it's not going to be good. I hope and pray that you're prepared.

This should be another reason not to trust your government. Think about it, all the Wall Street rich dudes missed it. The regulating agencies missed it. Even the credit rating agencies missed it. And of course, the Federal Reserve absolutely missed it. You'd have to be insane to trust these people in the future.
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