Banks Are Collapsing! The Silicon Valley Bank Failure Explained

Banks are meant to be a secure place to hold money. Why are we seeing bank failures in 2023? In this video I give a high level review on what caused the Silicon Valley Bank (SVB) to fail. This was the first in several banks to collapse. The events are still ongoing at the time of this video but there is enough information to understand the cause. The Tech boom is partially to blame along with record low interest rates. Tech companies flooded SVB with money and SVB invested that money into bonds. Unfortunately, they bought these bonds when interest rates were at a record low and to battle inflation the Fed raised interest rates quite a bit. When SVB tried to sell those bonds to get the cash for their clients they had to sell them at a discount and lose money. This caused others to panic which resulted in a bank run. This bank run and lack of funds led to the collapse of SVB, boom.

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