The economic markets follow basic concepts from the Wealth of Nations by Adam Smith. The United States economic market is it’s own living, breathing organism. It innately corrects itself. Adam Smith called it, “the invisible hand of the market”. Consequently, secondary to the influx of stimulus cash during the pandemic we had an abrupt blast of inflation. The marketplace however, needed to be slowly corrected to generate collateral circulatory support from the banking system. Thus, aggressively increasing interest rates over short periods of time would result in a great recession, great depression or banking collapse, similar to the Enron and WorldCom debacle that resulted in Dodd Frank and Sarbanes Oxley correction relative to regulation and oversight.
The SVB upper echelon of management falsely believed that since they had invested years of money in the start up industry, that these companies would be loyal with their hard earned corporate profits. This is not organically appropriate fiscal principles, it is business not personal, always. The bottom line, is the bottom line, expansive marginal profit. Start up companies are extremely fickle secondary to the volatile nature of their marketplace. Hence, the resultant run on SVB coffers/liquidity.
Economics is basic to me, the economic marketplace is a human being with innate systems. The circulatory system between the Federal Reserve and the banking system stopped understanding each other, and it led to disaster. Ultimately, the old Spanish proverb from Don Quixote, “don’t put all your eggs in one basket”, rings true. For sure, one basket must be the local Credit Union.