 We've basically nationalized the banks and that's one way to think about it. The private part of the financial sector has just shrunk dramatically and the regulated part of the financial sector has just gone up dramatically. And we'll just, we'll see that over the next several months and years. Another villain that's been blamed, I guess, uh, and this is coming from the highest, uh, echelons of government, including, uh, Biden himself is the concept, uh, or is deregulation basically that back during the Trump era, uh, the, the, the assets mix that the big banks had to hold did not apply to the smaller and mid-sized banks. And we're going to just play a clip of Biden here in a second, um, talking about, uh, the role that he thinks that played. And I'd like to get, uh, both of your response to the idea that, um, deregulation, um, weakening Dodd-Frank is what led to this problem. During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law to make sure that the crisis we saw in 2008 would not happen again. Unfortunately, the last administration rolled back some of these requirements. I'm going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again. Under Dodd-Frank, banks that had over 50 billion dollars in assets were regulated differently than banks that had under 50 billion dollars. And he, he mentions Trump and everyone mentions Trump, but actually it was a bipartisan decision in Congress because Congress was bribed, you know, you know, both parties were bribed, uh, to exempt, to raise that from 50 billion to 250 billion. Having said that, we don't know whether regulating them differently would have produced a different result. That's what no one has filled in. And I don't see any reason why that's true. There was nothing, nothing to stop regulators from coming in and getting Silicon Valley bank to change its behavior. In fact, the, the rapid growth of Silicon Valley bank was the reddest red flag a regulator could ever see. So there was just, and they could see the balance sheet. There was nothing stopping them. You can't just wave your hands and say deregulation. There was deregulation. They had the power, the knowledge they could have done it. Conversely, if it had been in the 250 billion dollar category, the regulators could have let them go. I mean, if they let them go as they stood, they could have let them go at 250 billion. There's just, so that's what's demagogic about blaming deregulation. There, there was enough discretion either above the 250 billion dollar level or below it to make whatever, make whatever decision they wanted and they made, they didn't make the best decision. Here, I want to bring up this, this chart from the Board of Governors and the Treasury and all of our slides, by the way, are linked below if anyone wants to see the data we're using here. But it's got several lines here. And you can see a sort of unprecedented, at least in this snapshot here situation where the blue line, the federal debt to GDP ratio is, you know, higher, higher than ever, the, that's, you know, new, new territory here. At the same time, the Fed is trying to tame inflation, which is the green line. You see it spiking up down there and using higher interest rates, which is the red line also, you know, obviously on an upward trajectory. So given this, what looks to me like a rather unprecedented situation, where do both of you expect this is all headed? At the 1970s, when you look at that inflation dynamic, even though there was a deficit problem, a lot of it was from very high levels of bank lending. That was our fastest pace of bank lending in US history. And that really coincided with, you know, people that were born in the baby boomer generation entering their home buying years. And so you had that surge of demand at the same time as you had obviously the oil supply constraints. And so a lot of there is more money creation from bank lending than there was from fiscal deficits. Whereas if you look back further to 1940s, that was an equally as an inflationary decade. And it was very little bank lending, and it was almost entirely a fiscal driven phenomenon. The basic massive deficits to fight the war were highly inflationary. And the current environment we find ourselves in the 2020s in many ways is more similar to 1940s, which is the vast majority of the money creation and the inflation was not because of excessive bank lending. I mean, bank lending levels are pretty normal. And almost all of it was from unusually large fiscal deficits that we've not seen since World War Two as a percentage of GDP. And I also, I don't really see a realistic path to cutting that anytime soon because you have social security, security, Medicare, that's very popular programs. It's just, it's, you know, kind of that third rail that that politicians don't want to touch. You have military spending, you know, we have 754 military bases over 800 billion a year on that. But especially what's going on geopolitically, it's, it's, you know, that's not likely to be cut anytime soon. And also then you have a lot of politicians that some of them do want to raise taxes, other ones don't. It seems like there's enough of a mix that it's, it's taxes are unlikely to go up materially. And so I think that, you know, we look at the 1970s, they, because debt, the GDP was so low, one of the things that they were able to do was sharply raise rates to try to bring down bank lending, get the positive real rates, and that helped get inflation under control. Whereas 1940s, because you had over 100% debt to GDP, it was very hard to raise rates. And so instead they just kept rates low, despite high inflation. And anyone holding dollars bonds and things like that really got devalued on an ongoing basis. And so I think that unfortunately, the 2020s are kind of shaping up in that direction, where, you know, they might get the positive real yields for brief periods of time, especially if they, you know, they're willing to cause a recession to do it. But I think the majority of the decade probably is just going to be have a tough time getting inflation under control, because I don't think they're going to get the depths that's under control. And I also don't think that interest rates are going to be high enough to compensate people for it. Have a nice day. Yes, our closing message is hold on to your hats, folks. Hey, thanks for watching that excerpt from my conversation with Lynn Alden and Arnold Kling about the Silicon Valley bank meltdown and what caused it? Who's to blame? What to expect next for the US banking sector? You can watch the full conversation by clicking here or on the link in the description below and subscribe to Reason TV and watch these conversations live every Thursday at 1 p.m. Eastern.