Debunking Economics - the podcast cover image

Another financial crisis that we all end up paying for

Debunking Economics - the podcast

CHAPTER

The Importance of Stability in the Financial System

SBB was operating like textbook economists think banks should operate as a conduit for savers and borrowers. It was largely making its money out of deposits rather than out of loans. So it's ironic that a bank that was in one sense being conservative is one of the first ones to go under. The value of the bonds went down, but they weren't particularly directly affected in mainly the non-bank financial institutions. But now with rates being pushed up, they're getting more for the new bonds that are being issued, but the old ones are dropping dramatically in value.

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