But the Federal Reserve Chair Jerome Powell said the banks were “well capitalized,” and he’s supposed to be the expert, right?
The cannabis industry will feel SVB’s collapse because every sector will feel the consequences.
Fed Chair Powell is not an “expert,” but a stooge—the media liaison for the corporate-state cartel of money counterfeiters.
Consider what Murray Rothbard, a real expert, writes in What Has Government Done to Our Money?:
The bank creates new money out of thin air, and does not, like everyone else, have to acquire money by producing and selling its services. In short, the bank is already and at all times bankrupt; but its bankruptcy is only revealed when customers get suspicious and precipitate “bank runs.”
An accounting trick places government bonds as either “available for sale” or “held to maturity.” Silicon Valley Bank had $91.3 billion in securities classified as “held to maturity” on its year-end balance sheet.
Held-to-maturity allowed SVB “to exclude paper losses on those holdings from both its earnings and equity.”
In a footnote to its financials, the bank reported the value of those “held to maturity” securities was $15.1 billion below their balance-sheet value.
“The fair-value gap at year-end was almost as large as SVB’s $16.3 billion of total equity,” the Wall Street Journal article revealed.
SVB is Only the Beginning
The cannabis industry should take notice; this isn’t a situation unique to SVB. Investment capital is drying up.
The Federal Deposit Insurance Corp. (FDIC) reported that U.S. banks’ unrealized losses on available-for-sale and held-to-maturity securities totalled $690 billion as of September 30, up almost fifty percent from the previous quarter.
FDIC Chairman Martin Gruenberg said in a December 1, 2022, speech:
The combination of a high level of longer-term asset maturities and a moderate decline in deposits underscores the risk that these unrealized losses could become actual losses should banks need to sell investments to meet liquidity needs.
And indeed, SVB’s official reason for selling their holdings was to raise fresh capital. “We expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients as they invest in their businesses.”
But as Murray Rothbard pointed out,
No other business can be plunged into bankruptcy overnight simply because its customers decide to repossess their own property. No other business creates fictitious new money, which will evaporate when truly gauged.
SVB & the Cannabis Industry
We solved nothing from the 2008 crisis. The banks are still corrupt as hell. And the government is in bed with them.
Occupy Wall Street was a rational response to electing anti-war, anti-bank bailout Barack Obama and realizing he’s on the same payroll as the Bush Family.