Bailout of the banking system create social tension. Eventually, bailouts introduce so much risk into the system that failures and bailouts become too costly for the society to bear, government creates draconian rules trying to prevent them in future, which in turn kills innovation and the formation of new businesses, and the result is a stagnating economy.
Tag:
Spring Letter 2023
The Silicon Valley Bank collapse may be an extreme event, but it gives us a preview at a 100x magnification of what other banks are facing.