Silicon Valley Bank (SVB) Collapses

[JeffKeryk]

Who said the government is loaning anything?

Please see post #407.

 

[wpod]

That's the bit I'm after. Are you telling me that the federal Reserve loans $1000 of worthless paper and then expects back a $1000+interest of that same worthless paper?
See there is a reason we are not on gold standard, that's because the '+interest" part was paid in exactly that, gold and then it run out. That is why I'm asking what are we paying the interest with now that the gold is gone? It cannot be with the worthless paper.

Yes but then our paper currency is worthless paper other that its preceived value at the moment.

 

[PWMDMD]

Yes but then our paper currency is worthless paper other that its preceived value at the moment.

Everything real or virtual is intrinsically worthless except we all agree it has value.

 

[SC Maintenance]

In the case of SVB, as a bank they purchase assets of various types and terms. A high percentage of their assets were long term that could only be sold at discount because of today's higher rates. Short term liquidity became a fatal problem for SVB.

If they were just illiquid they could have parked those assets at the fed open window as collateral to borrow money short term. The problem was (I assume, because they couldn't borrow money) - that they must have lost too much and are actually insolvent not just illiquid.

ie they were bankrupt, not just out of cash at the moment.

 

[Astro14]

This thread has turned into pointless back and forth. It’s 400+ posts long, and it is clear that some folks in the conversation are using it to push their point in endless repetition - so, like my failure in trying to teach physics in BITOG threads, it’s clear that teaching basic economics doesn’t work, either.