• The Federal Reserve’s quantitative easing policies have caused an inevitable collapse of the financial system, and the Silicon Valley Bank (SVB) bankruptcy is just the tip of the iceberg.
• In order to combat inflation, money printing has been rampant and credit and debt levels have increased to unsustainable levels.
• The only answer is to break out of this cycle by introducing anti-antifragile measures which will help prevent future collapses.
The Financial System is Fragile
The events from this weekend highlight just how fragile the financial system has become as a result of the Federal Reserve’s quantitative easing policies. The Fed’s attempt at tightening in order to reduce inflation has caused demand destruction – creating unemployment which lowers spending – but it has also set off a slow motion train wreck in terms of banking and finance.
The Collapse Was Inevitable
The collapse was inevitable as long as the current system remains intact, with quantitative easing being used as a bandaid fix without actually providing any real solutions. The Silicon Valley Bank (SVB) bankruptcy is merely a sign that similar failures may continue over the coming years due to increasing levels of credit and debt, leading to periods of both inflation and near collapse when financial levers are pulled in opposite directions.
Money Printing Can’t Fix Anything
Money printing alone cannot fix anything; it only serves to paper over cracks in the system until they inevitably grow too large for it to remain functional. This type of approach makes bank runs increasingly likely as confidence dwindles, making it all the more important that anti-antifragile measures be implemented – such as increased regulation or increased capital requirements – in order to protect against future collapses.
The Implications Are Worrying
It raises worrying questions about how many other banks could already be insolvent or teetering on the edge without investors or depositors realizing it yet. It also calls into doubt whether emergency meetings held by executives desperate for solutions are enough to keep them afloat until more sustainable solutions can be found.
To conclude, this weekend highlighted just how fragile our financial system really is and all signs point towards further collapses unless we intervene with anti-antifragile measures now before things get much worse down the road.