Democrats Deserve Plenty Of Blame For The Bank Crisis

The United States suffered its second-largest surprise of the weekend. bank failure in history. It is widely believed that Silicon Valley Bank made a grave mistake in borrowing short-term money and then investing it in long-term bonds. SVB was placed in a dangerous position when interest rates increased. Assets lost value and SVB suffered.

Joe Biden promises There will be a “full accounting” a situation where everyone will be held accountable “accountable.” This would require the president to take responsibility for creating the conditions that allowed this to happen. If Biden had been more responsible than a cynical partisan, the Fed wouldn’t have been forced to raise interest rates.  

Fluff is frustrating to read Like Politico’s “How Biden saved Silicon Valley startups: Inside the 72 hours that transformed U.S. banking,” Against all evidence and common sense, it was the president and his party that created the conditions that led the crisis.  

Let’s recall that virtually the entire left-wing political infrastructure — media, politicians, and expert class — was activated to Retire The concerns of those who feared inflation were well-founded. The reason was simple: Democrats wanted as many long-term expenditure proposals as possible while holding both houses. This had to be accomplished in two years. This was possible with Joe Manchin’s support. Joe Manchin would occasionally appear to be concerned about spending.

Biden signed the so-called American Rescue Plan worth $2 trillion in 2021. This plan sent checks to millions of people while Covid lockdowns were ending. After issuing several presidential decrees restricting affordable fossil fuels (with some Republican assistance, Democrats would later adopt a $715 billion green). “infrastructure” bill). The Fed maintained rates at zero while pumping billions into an already hot post-lockdown economy. Inflation began spiking.

This is when the word “word” comes alive. “transitory” began making an appearance. The president argued in the summer of 2021 that “there’s nobody suggesting there’s unchecked inflation on the way — no serious economist.” Jen Psaki, White House Press Secretary Claim That “no economist,” Either serious or not, it was projecting higher inflation because of more government spending. (And while the politicization and destruction of economic departments is a disaster that’s not covered here, it’s still a story. Janet Yellen, Treasury Secretary promised There was “small risk” inflation, but that it would not be “manageable.”

Ron Klain, then-chief of staff for Biden, called inflation “an inflation” when prices began to creep up.High-class problem“Before Democrats invariably pivoted to blaming Corporate greed argument that conglomerates suddenly conspired after 40 years of keeping prices in check to screw over consumers. Piece after Piece Reject the “It’s weird” hawkish Ideas of people who warned that inflation would be triggered by spending.

Biden will not slow down. argued We should spend an additional $5 trillion to reduce price spikes “If your primary concern is about inflation, you should be even more enthusiastic about this plan. We can’t afford not to make these investments.” The Democrats simply renamed it the Build back Better spending bill. “Inflation Reduction Act” — though the new iteration had as much to do with inflation as the Patriot Act had to do with patriotism. It was simply another long-desired leftist wishlist and tax increases. There were many. “investments” The bill included $369 billion more that was dumped into green boondoggles. This is a slush money for Democrats and donors. It’s the type of market distortion that causes the problem. fueled SVB.

Soon Americans were dealing with Highest point in 40 years inflation. Because of the need to slow down economic growth, the Fed was forced by law to raise interest rates. In the ’80s, years of persistent inflation were only shaken off when Paul Volcker raised rates to 20 percent — and the country experienced a deep recession. The 30-year-old recession Fixed rate The 1981 mortgage rate was 18.63% Are you adamant that houses are now too expensive?

We learned this week that inflation is a real problem. rose The February growth was 6 percent compared to 6.4 percent in January. This is the slowest rate since September 2021. still These are historic highs. This is absurdly being spun by the administration as good news. But what next? To stop inflation, the best thing is to slow down the economy. The Fed must reconsider easing growth as it could lead to widespread bank run. There are few options.

Democrats and other populists will blame greed and deregulation. Never let a crisis get away. CNN’s Manu Raju already Prowling This narrative is being told in the halls of Congress by Manchin asking senators if they regret voting against the 2018 Dodd-Frank. “roll back” — which has nothing to do with the SVB run — rather than asking him if he regrets voting for trillions in new spending in an overcharged economy. Media hackery can lead to serious consequences.   

It is true SVB and Signature Bank — another failed bank — were heavy investors in crypto, green energy, tech start-ups, and IPOs with unrealized profits. The American financial system is built on the ability to accept risk. This is what separates us as innovators and entrepreneurs from other countries. But, is it true? “risk” What if some investors are unable to lose? Will it spread contagion if SVB’s 40,000 accounts don’t get refunded? Is it not possible to make too-big-to fail bigger by bringing in big banks and white-knighting regional banks?

These are difficult questions. But one of the biggest reasons we find ourselves here is clear: a lack of basic governing competence.

David Harsanyi is a senior editor at The Federalist, a nationally syndicated columnist, a Happy Warrior columnist at National Review, and author of five books—the most recent, Eurotrash: America Must Resist the Failed Ideas Of A Dying Continent. He has appeared on Fox News. Fox News, C-SPAN. CNN. MSNBC. NPR. ABC World News Tonight. NBC Nightly News. And radio talk shows all across the country. Follow him on twitter @davidharsanyi.