Explain The Fractional Reserve Banking System Like I'm 5 Years Old

https://t.me/smoakpipe
SMOAK BUSINESS CHALLENGE SIGN UP LINK https://www.smoaknation.com/smoak--f92ca

Explain Like I'm Five

Silicon Valley Bank is a bank.

It holds money for customers.

Generally, it loses money when holding customer money, so it needs to lend out at least as much as they hold.

Most of its customers are Startups with large amounts of deposits.

in 2020/21, when Jay Powell kickstarted the money printer 🖨️💸, a lot of VC-money poured into Startups and, thus, into SVB.

SVB didn't know what to do with this money, so they purchased US Treasuries.

At that time, $100 VC-money = $100 USTs.

Jay regretted the amount of money printing, as everything got more expensive. 😥

He pulled money out of the system.

$100 USTs are now worth $60.

$100 VC money =/= $60 USTs – uh oh.

Startups hold bazillions of $$$ at SVB, but Jay only promises them $250,000 if SVB goes bye-bye.

Startups 🏃‍♂️💨 ... SVB.

SVB ☠️.