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by SilverBirch
1200 days ago
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One thing that's kind of weird here is the peverse incentives. There are quite a lot of people going around insisting that the government has to step in and bail out the large depositors of SVB becuase if you don't, well... then no small bank is safe! There should be a run on every bank! Which is kind of... you know. Scummmy. If your money is locked up in SVB its certainly convenient if the Fed feels it has to step in and bail you out even though SVB isn't systemically important. So what you do is you make the argument that the system will collapse because there will be a run on every bank! But... the only thing that's likely to cause a run on every bank is... you. You, running around shouting that no bank is safe. Real people are FDIC insured. The problems with SVB are specific, not systemic, and there are other banks and they may also have this specific issue, but if they do then people will pretty quickly catch on (hint: these issues weren't hidden). You can make a broader point, which is that SVB failing will impact a lot of silicon valley businesses, and you can do your best to argue those businesses are creating a fantastic new world and there worth saving (and definitely aren't causing teen depression, minting billionaires who use their wealth to destroy free speech, and generally just enriching loathsome fraudsters), but then you are basically arguing for the Fed to step in and socialise the losses of douchebag libertarians. Fine, save SVB, funded by a 1-off 100% wealth tax on anyone worth over $10m in silicon valley. Welcome comrade. |
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The interesting part to this is that if wealth (assets) were taxed thusly, they would probably lose a lot of value when liquidated to pay taxes, thus decreasing the realized taxable amount. As I understand it, a similar principle was behind SVB’s “losses” as well.