#125 - NOAH SMITH
POD OF JAKE
00:00
The Systemic Risks of Bank Failures
The bigger problem here is just that raising interest rates makes a lot of treasury bonds, long dated treasury bonds, like 10 year treasuries, whatever, lose value. So if people yank their deposits, you can't get as much cash to pay them. That lowers the amount of deposits that people have to yank in order to bring down any given bank. Does that make sense? Yep. And that has weakened our financial system and yet inflation is still running hot. So we're going to have to do more interest rate hikes, which means more weaknesses for banks,. We are probably going to end up having to guarantee all unsecured deposits, at least until inflationary episode is
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