[machina_ex_deus]

The banks got to play and invest that money off those depositors. The investment was in government bonds. So essentially, the government got to use those depositors money, and then turned around and gave them back their money. Oh and it also inflated away the value of that money. If you think this is capitalism or the system working properly, you're deeply wrong. Finally, if this thing didn't blow up, those depositors would've seen none of the profits from lending to the government which is clearly a risky business.

This is the same old story, governments printing money. This time they held hostages as they were printing their money. Almost like Money heist. Funnily enough, the narrative is so strong they are somehow the heroes. Maybe because people can't understand that inflating money is stealing.

[arcticbull]

> The banks got to play and invest that money off those depositors.

And they got wiped out because they did it badly, while depositors kept their deposits. The system works.

> So essentially, the government got to use those depositors money, and then turned around and gave them back their money.

The government didn't give them back their money, the loss came from the DIF, which is a fund made of private contributions assessed to member banks. No government money was spent making depositors whole. I wouldn't care if it was personally, I think that's kind of the point of the government, but in this case that's simply not true.

> Finally, if this thing didn't blow up, those depositors would've seen none of the profits from lending to the government which is clearly a risky business.

Er, no, the bonds would have matured and they would have received face value plus interest. Lending to the US government is the least risky thing one can do, three-month treasury yields determine the 'risk-free' rate.

> This is the same old story, governments printing money.

The Fed actively manages the money supply. I'd look at where the demand for dollars is coming from to better understand the system and what's actually happening in the economy. These simplifications border on conspiracy.

[hartator]

> while depositors kept their deposits. The system works.

I think depositors should still refund the 4.50% APY SVB on business savings was paying.

> No government money was spent making depositors whole.

That’s not true. There was a new 50bn debt hole in money created from thin air. Tax payers are footing the bill temporary at minimum.

[joshuamorton]

They aren't though, that's the point of the deposit insurance. The government has a non-taxpayer funded bucket of money for exactly this purpose, and no money was created from thin air.

[hartator]

These are tax payer liabilities at the end of the day.

You can view it here: https://twitter.com/jacksage_nft/status/1638494009361420290?...

[joshuamorton]

That's wholly unrelated to the bailout. The FDIC would have been able to bail out both banks whether or not the fed changed rates.

[machina_ex_deus]

The government is a financial bully. It starts by printing money for itself, and using the value of the money in the present. Then it causes inflation which robs financial value out of everyone who lended to it. The actions of the Fed are extremely unpredictable.

If you're not a part of some inner clique you can't tell when will the Fed pivot. It took the Fed a goddamn one year too long to raise rates. Everyone who has no knowledge of the Fed actions beforehand is losing huge financial value. hundreds of billions of dollars rest on these decisions, and any common person who trades and does any financial decision in the wrong side of the Fed is being robbed of financial value by the Fed. Instead of playing capitalism we've been playing Simon says.

[arcticbull]

> The government is a financial bully.

Yes in the same way the EPA is an 'environmental bully' - so actually no.

> It starts by printing money for itself, and using the value of the money in the present.

I'm really not sure what this means - I suspect you're conflating fiscal and monetary policy.

> Then it causes inflation which robs financial value out of everyone who lended to it.

Inflation has many causes, changes in supply aren't necessarily inflationary - what matters is what that new supply is used for and where demand is coming from. For instance there's a ton of demand for dollars from abroad. If new money is created and it goes into say dollarized nations then no, it doesn't. This is but one example. That's why supply increase isn't inflation - it's supply increase.

> The actions of the Fed are extremely unpredictable.

Actually they telegraph them far in advance.

> If you're not a part of some inner clique you can't tell when will the Fed pivot.

They will absolutely tell you in advance, like they told us they'd start tightening well in advance. That doesn't mean people won't try and front-run it.

> Instead of playing capitalism we've been playing Simon says.

I suggest you think this through some more.