 The radical, fundamental principles of freedom, rational self-interest, and individual rights. This is The Iran Brook Show. All right, everybody. Welcome to Iran Brook Show on this Sunday, we have Sunday, March 12th. Thank you for joining me, and I apologize for the kind of, you know, unusual timing of this particular show. And we were supposed to have a show yesterday, and there was confusion on my end, anyway, between me and Angela, and it was only resolved at the last minute, so I had to cancel yesterday's show. Turned out to be perfect because we shouldn't have a Q&A show today. We should really be talking about Silicon Valley Bank, even though we've already talked about it twice. We talked about it in the interview with Robert Hanshahn. We also talked about it on the News Roundup Show on Friday, but, you know, more information is coming out. Hysteria has fully manifested itself on Twitter, where everything important gets discussed and resolved, and so it is the right thing to be talking about, and, of course, depending on what will happen over the next few hours, really, I expect news within, I think, within the next three hours. I mean, they're gonna try to make the news come in, I think, before Asian markets open. I'm not sure exactly when Asian markets open, but I expect news from the FDAC, or from Jaleed Yellen, or from somebody by 6 p.m. East Coast time, but we will see, we will see. Anyway, depending on that news, a lot could happen next week, nothing could happen next week, or very little could happen next week, a lot of things up in the air. So, what I wanna do today, I wanna go through, okay, what happened? We've already done that, so I won't go into too much detail there. We did that on Friday. Where we are right now, what are the risks, right? Why is everybody panicking? What are the risks involved in the situation with regard to Silicon Valley Bank, for the economy, for the banking sector, for life on earth, I guess. We'll talk about those, and then what are the likely outcomes, what's gonna happen. I've got the news kind of open on my screen, because likely outcomes could shift, depending on what happens over the next, again, a few hours, there's really a good chance that we're gonna hear something again in the next, I'd say, three hours or so. Maybe it'll take longer, but tonight we're definitely gonna hear some stuff, significant stuff tonight, about the situation with Silicon Valley Bank, and we'll talk about why that's important, and then I do wanna talk about this issue of a bailout. Is Silicon Valley gonna be bailed out? Silicon Valley Bank, should Silicon Valley be bailed out? What does it mean to bail out a bank? Who is being bailed out? A lot of people are talking about bailouts, but really have no clue what they're talking about. Does a bailout, some kinds of bailout necessitate taxpayer money, other bailouts don't, what is the difference, does it matter? We'll talk about all of those. So we're trying to, generally, the goal today is to kind of bring clarity to what's going on with Silicon Valley Bank and the banking sector, and its impact on the economy more broadly. I think I'm gonna go into professor mode, in a sense, in discussing that, and then take your questions, see kind of what issues, questions you have. But I do find the whole discussion about, oh my God, it's a bailout, oh my God, it's not a bailout, oh my God, how can you advocate for bailout when you are? Anyway, all the discussion is useless and useless, particularly given that nobody defines what a bailout means, nobody actually articulates what exactly they're talking about. So we're gonna try to get clarity on all of that, we're gonna try to make some predictions about what's gonna happen, although those predictions could be made moot in a matter of minutes after the prediction is made because this is an evolving story, believe me right now, nobody is sleeping at the Treasury Department, very few people are sleeping at the Fed, sleeping and resting at the Fed, and the FDAC is in for frantic mode, they are occupying the offices of Silicon Valley Bank, but they are communicating with numerous players out there, my guess is that there are teams, there are teams at Goldman Sachs, there are teams at JP Morgan, there are teams at a number of regional banks around California, but there are teams probably in all the big banks, big money center banks, those teams are working frantically as well. So if you're in banking, if you're related to banking, if you're touch banking in any way, everybody's working this weekend, everybody's working this weekend for, for, there's no question about that. Let me just say, I should say this right up front, I should say that I do have a personal stake in what happens tomorrow and the rest of the week and the rest of the month, but as I have a stake in how everybody responds to what happened to Silicon Valley Bank, as I said, I think on Friday, I do not have a direct stake in Silicon Valley Bank, I don't have a direct stake in Silvergate Bank, the Crypto Bank, but I do have stakes in other banks, so the impact is there, it's not important what the stake is and what affects the market, how, but let me just say, there's nothing I'm gonna do here that's gonna make one IO to have a difference, basically my fate is in the hands of bank customers, bank management, Janet Yellen, FDIC and the whole array and JP Morgan and JP Morgan Chase and Goldman Sachs and all the rest of them, so how this gets resolved tonight will have a huge impact, will have an impact on me, so just so you know that, I have a stake here, but nothing I say tonight is gonna impact it one way or another, so it's not like I can influence the outcome, so I'm not gonna be trying. All right, so let's run through kinda what happened and then talk about kind of the why it's such a problem for so many people and you're gonna give me two seconds, I'll be right back. Okay, so last week we talked about this, another bank, a Silvergate bank out of San Diego, a relatively small bank that was specialized in crypto because of FTX, because of people drawing money from crypto, so basically specialized in crypto, man, that their deposits were from, crypto companies, crypto investors, crypto bros, whatever, and so mostly it was under deposit site and basically there was a run on the bank, run on the bank not because the bank was bad or the bank had problems, but primarily run on the bank because crypto was collapsing, the US government was clearly not supporting crypto and not supporting banks that were doing crypto in any kind of way and people started withdrawing money from the bank, the bank got into liquidity problems, it couldn't fulfill all the outflowing demands for people to withdraw their deposits. They had loans, they had a lot of securities, some of those securities were underwater, but the bank basically said, look, we're just gonna liquidate, we're just gonna fold, we are going to sell all our assets, we're gonna sell all our securities, we'll sell all the loans and we will return all the money to depositors and the market believes that assets are greater than loans so there's probably gonna be some residual for shareholders, shareholders will lose a lot of money, but they will get something back and something might be two bucks a share or three dollars a share, hard to tell, lots of people are speculating on exactly that and trying to make money off of it. On Thursday, it became evident that Silicon Valley Bank and Silicon Valley Bank is a bank in Silicon Valley, it's a legendary bank, if you live in Silicon Valley, you know about Silicon Valley Bank, if you've ever been in the venture capital business or in the startup business, whether it's in Silicon Valley or really anywhere in the country or anywhere or in many countries in the world, Silicon Valley Bank has branches in London and Israel and Singapore and many other places, even in China, it has a joint venture with the Chinese Bank in China. If you're in that world of startups and venture capital, Silicon Valley Bank has been there since the 80s, basically it is a bank that specializes in dealing with startups, dealing with venture capital funds. A lot of these startups are open accounts with Silicon Valley Bank. The bankers are very familiar with startup world, so they basically provide financing, lines of credit, they often provide loans, they sometimes in the loans get an equity stake in times of when during the dot com bubble and I believe in the last five years when things are going really, really well, Silicon Valley has done phenomenally well and has grown and it's become the 16th largest bank in the United States. And it has made money, it's profitable, it has great relationships, it is incredibly well regarded within the Valley and within the venture community and within the startup community and basically almost all the 50% of startups, something like that, something like that, hold their money, hold their deposits at Silicon Valley Bank, or held their deposits at Silicon Valley Bank, at least at Silicon Valley startups. And they were encouraged to do so by the venture capital firms. Again, there was a very close knit relationship there between the bankers, the VCs, the startups, they all live in Silicon Valley, this is all part of the culture and Silicon Valley Bank was very much, is very much part of that culture. The problem is that in times of venture slowdown, certainly, let's say 2001, 2002, 2003, and in times of slowdown, like over the last, what, 15, 16 months, in startup, in venture funding. You know, venture capital firms that have all their deposits, they might have several million dollar bank accounts with Silicon Valley Bank, they might start withdrawing that money and the bank wouldn't get new startups putting money in or older startups raising more money from new rounds of financing to put new money in, basically during a time of contraction within the startup world, contraction within the venture capital world, what you see is what you'd expect. That is the amount of money in these bank accounts starting to dwindle as startups take money out and pay wall and buy equipment and do pay rent and do the things that they need to do in order to survive. And then there's no fresh money coming in because the venture community is not funding new startups at the pace that they used to. Older startups are not raising new capital at the pace that they used to. And therefore, what you saw is a slow outflow of deposits from banks and of course, the bank that was most affected by this, the Silicon Valley Bank. Now usually, that is not that big of a problem because the bank is holding a significant amount of reserves in liquid assets. These are typically not loans because loans are not liquid. It's hard to liquidate, sell loans and get the cash in order to pay the depositors. So what they hold typically is a large, but for your securities, typically gum and bonds, typically short maturity gum and bonds where there's an incredibly liquid market. And as depositors need their money, they can sell those bonds and provide that liquidity to depositors. And as long as it doesn't all happen all at once like falling off a cliff, they can continue to supply the depositors with that funding. Now what happened with Silicon Valley Bank is that during COVID, during the zero interest rate era, when the yield curve, yield curve is the curve that reflects interest rates at various maturities like a three-month treasury security versus a six-month security versus a 10-year bond or a 30-year bond or a five-year bond, the relationship between those is the yield curve, the yield in those various maturities. When the yield curve is flat, that is the yields on all these securities is very low. And well, in this case, very low and relatively flat, but very low, particularly short-term securities because the Fed is keeping interest rates zero. Then the bank has a hard time making any money on buying these securities because it's paying no interest on the checking counts, but it's also getting nothing on its securities because interest rates are zero and they held at zero, they kept at zero by the Fed. So if I'm buying treasury bonds, I'm getting nothing. And the big picture here is, and I want you to keep this in mind, the big picture of this whole story is, Silicon Valley Bank is one-off, one-off. The many, what do they call it? Chips to fall, shoes to drop. I don't know what the metaphor is. The many things that are happening and are going to happen, lots of it's going to happen, as a consequence of zero interest rates, inflation and rising interest rates. That shift from zero interest rate environment to a rising interest rates has many consequences, many consequences. We've talked about the potential of zombie companies to go bust and all kinds of other things. This is one of those consequences. What we're seeing right now is one of the consequences of the fact that during the zero interest rate environment, some banks, including Silicon Valley Bank, what they did was, they went out and they bought, instead of buying three months, six months treasuries, which they can easily sell, and if interest rates go up, then what happens when interest rates go up is the yields on those also go up with interest rates, because you're renewing them constantly. It's almost like having a variable rate instrument, because you're constantly six months expired, you get a new one, new one is at a higher interest rate, and they keep going higher and higher and higher as interest rates go up. Instead of doing that, which in the short run would have made them, in a sense, make very little money, but in the long run would have completely protected them. Instead of that, what they did was they looked, what we call chase the yield. They looked at longer maturity, longer dated bonds, with slightly higher interest rates, but that means that when interest rates went up, these interest rates wouldn't adjust on these bonds because when they bought them, the interest rate is fixed. So if the interest rate is 1%, if interest rates go to 5%, they're still only getting 1%. And the problem with that is when interest rates go up on a fixed rate bond, the value of that bond goes down. So if you sell that bond, you're gonna get less money. So they bought government bonds, long dated government bonds, they bought mortgage-backed securities that yielded a little bit more because there's a little bit of a risk, and they're also, again, long dated. And what happened was when you started having this trickle-out of venture, of startup money going out and no fresh money coming in, that is a net withdrawal of deposits, what happened was the city of Valley Bank then had to go and start selling securities. And the problem is that if they'd have short-term securities, they would have sold them in no big deal. But here they had long-term securities, so they sold them at a loss. So they were reporting losses. Now, in order to compensate for this loss, Silicon Valley Bank on Wednesday night announced that they were going to basically issue more stock, raise capital, about $2.8 billion, not a lot of money, not a lot of money in this context. Raise capital on Thursday in order to make up for the losses on the security portfolio, and they thought, no problem, if we raise this capital, we can continue to pay our depositors as they trickle out. We've got an estimate of the next 12 months, slowly there'll be deposits coming out, there won't be a lot of money coming in, there'll be a lot of money coming out, we've got this kind of control, we get this more capital, and we're fine. But at that point, two things happened. First of all, they didn't do a good job communicating exactly what was going on. And a lot of people said, whoa, why Silicon Valley suddenly raising capital? They must be in trouble, big trouble. And as a consequence of that kind of interpretation, and a consequence of the fact Silicon Valley Bank didn't really have anything to say about it, Thursday night, Friday morning, before the market opened, people were wary of providing them with capital because they didn't know how big the problem was, and it seemed like it could be a lot bigger than they thought. And part of the reason they didn't want to provide them with the capital is that already people were drawing money really, really fast. And that was happening already on Thursday. And then you got Peter Thiel and other venture capitalists telling their startups, pull all the money out of the bank. So instead of a trickle out, instead of some money coming out as these startups were using the money, and yes, it's a net decline in the amount of deposits, suddenly it was a flood out. And the reason it was a flood out is because people panicked and they were worried that if they didn't get their money out first, the money would never be there, it would disappear, and everybody started to take their money out. They were doing wire transfers at the last minute out of Silicon Valley Bank into other places. And now $2.8 billion raising capital wouldn't have made any difference. Selling more securities would have only increased the amount of loss recognized and would have had no benefit. So this is a typical run in the bank. People start panicking, people start thinking the worst. It becomes a self-fulfilling reality. It becomes people are afraid, so they pull their money out. More people see them pulling their money out so they become afraid, so they start pulling them out. Some venture capitalist says, you should all pull your money out, everybody starts pulling them out, or at least tries, and suddenly the bank is finished. They cannot produce enough liquidity. They cannot sell enough assets quickly enough to pay off all these deposits. And what happened indeed Friday morning is it was clear the bank could not pay those deposits, couldn't raise the capital. Stock price was basically plummeting. So the stock price was frozen in a sense. And by, I think it was noon, I remember noon you could see it on the ticker, the stock price ticker. Just as the markets were starting to calm down because it seemed like the worst was over, the FDIC said, we're taking over Silicon Valley Bank. We're taking hold of the whole thing. If you've got $250,000 in your bank account, the problem will give you that on Monday, but anything above that is uninsured, that'll take some time. We don't know how much you'll get, but that's gonna take some time to get it to you. And suddenly everybody's in big trouble. And if you went Silicon Valley and the banks around there, Silicon Valley Bank, branches were packed with people knocking on the door, trying to get in and withdraw their money, it doesn't work that way, guys. That's pretty hopeless and useless. You're not gonna get the money of the bank branch once the FDIC has shut the bank down, not until something is resolved. And that's something I think will be resolved in the coming hours. So Shay asked a question that's relevant, so I'm gonna, he's gonna jump the queue. He says panic has an implication of irrationality. Do you think it was wrong to withdraw funds from SVB on Thursday? So, no, and I don't think panic, I don't think it was wrong to withdraw. I mean, I don't know wrong in what context, right? So was, if everybody at state calm was the bank gonna go under, would there be any problem? No, but the reality is that in situations like this, and in a situation, and we can talk about this, we'll talk about the fact that we're not in a free market, when a heavily regulated circumstance, banking would be structured completely differently in a free market. And so this whole scenario, if you will, that creates these situations where panic is maybe your only outcome, even though it's irrational, but what would be the rational thing to do? That is a consequence primarily of the fact that banking, and this is a really important point. Banking in the United States is not private. You could think of banking in the US as a government, is a government, what do they call it? A public-private partnership. A project of both that is heavily government-controlled with some private decision-making and some private capital, but even when it comes to capital, there was kind of an overlay of government guarantees. So it's this hybrid public-private entity. So if you're holding, if you've got a deposit on Thursday at Silicon Valley Bank, I think panic has more to do with the speed of the decision-making and the extent of it. I don't think it's necessarily rational in this case. But again, it's a situation you're placed in outside of your control, a situation you're placed in that leaves you, in a sense, no good options. But the only, I guess, given the world in which we live, given the kind of banking system that we have, given the role of government in the banking system, the only thing you can do on Thursday when there is a fear of a bank run is to make a bank run happen. That is, the fear of the bank run is self-fulfilling. There's just no way around that fact. There's no way you can sit back and say, well, there might be a bank run, but I don't think it's rational to participate in it, but it is rational because the people who get their money out first get their money out. The people who don't get their money out first, what happens to them? They will probably get their money, we'll talk about this, they're probably gonna get all their money, but it's gonna take a while. It's gonna take a while for them to get money and there's real value to time. Having my money now versus having my money sometime in the future with even a tiny little probability that I don't get all of it back, not the same. So there's definitely a vested interest in the way the market is structured. And again, I don't think the market is structured in a way that a market would structure itself if left free. If property rights were properly protected, people could negotiate deals if the market was a free market. I don't think it would look anywhere near what it looks like today. But in the world in which we live, where there's banking, is this private public partnership? Yeah, I mean, you need to get your money out quickly. It's the rational thing to do. It makes the most sense. So I don't mean by panic to mean irrational. I mean, happened really, really, really fast. And VC is telling their people to take their money out. And why were they telling them? Because they worried that the other VC would tell people to, I mean, those are the kind of problems you get when you build the system as fragile as the American banking system is. And the American banking system is fragile, always has been, always has been. And it's fragile because of the way it's regulated, because of the way it's controlled, because of the role governments and government regulators and the incentive structure that's built in to banking in the United States. Because of all that, that's what makes it fragile. That is, you're not gonna overcome the fragility by more regulation. Indeed, the regulations are what create the fragility. So hopefully that answers your question, Shay. Anyway, so that's what happened. That's what happened. And here's the challenge. So right now, Silicon Valley Bank, everything is frozen. On Monday, if you have less than $250,000, or everybody will get $250,000, everybody gets that. What happens to the rest of the money? Because most of the money, so 93% of all the deposits, something like that, of all the deposits at Silicon Valley Bank, this is the highest rate in the country, are actually uninsured deposits. That is, they don't qualify for FDIC insurance, because FDIC insurance has a limit of $250,000. And most of these bank accounts are very large. Why are they very large? Because again, a startup gets $10 million of VC money. They put the $10 million in their bank account, and they withdraw it as they need it. Or $1 million, or $5 million, $250,000 is a fraction of all of that. So most of the money in the checking accounts, and in the saving accounts at Silicon Valley Bank is uninsured. It's backed by the assets of the bank, and the bank has plenty of assets. The problem is selling them. So right now, you can get your $250,000, no problem. Anything above that, you're gonna have to wait and see what the FDIC decides to do. That is, ultimately, you'll get it when they sell all the assets, theoretically, right? Theoretically, because other things can happen in the meantime. But theoretically, what will happen is, regulators will sell all the bank's assets. They'll take all the money, and they'll pay everybody, pro-rata. And given how many assets the bank has, and if the sale is not frantic, if the sale is a reasonable sale, then it's likely that the bank will get back all or most of the money to depositors, but it could take weeks, months. Some of the money, they've already promised that they will get immediately how much they're not saying, but some money people will be able to withdraw on Monday. But what happens to the rest? So there's a situation in which founders of companies, startups. Now, there is a tendency right now in America, and among, unfortunately, the viewers of my show and people on Twitter and everywhere, to think, who cares? These bastards in Silicon Valley, they're all woke, they're all horrible. Let them suffer the consequences. They should have watched where they put their money. They shouldn't have put their money all in the same place. You know, let them fail, it's good for them. Let them lose some money. I get it. I mean, I find it interesting that the sentiment now is more tribal than it is economic, or more tribal than it is moral, because let's say it's interesting who advocates for what right now? Let's say this was, as somebody used as an example online, if this was a farm bank, and a lot of farmers are gonna lose their money, I think people on the right would be going, oh, no, no, we have to protect the farmers, we have to bail out this bank to protect the farmers, but it's Silicon Valley entrepreneurs, who cares? They're all a bunch of leftists, so we don't care, right? Which is, which is interesting. So the response is all tribal and a lot of it is silly. I mean, there are a number of big risks here, risk to the economy, and to trivialize start-ups is to trivialize the future of this country. Now, I'm not saying anything about the bailout, I'm just saying, if you think, good, we're getting back at the Silicon Valley bros, then you're nuts, because the fact is that American economy depends on those Silicon Valley bros. The fact is that start-ups constitute a significant percentage of GDP growth in this country, of innovation, of growing standard of living, of high quality of life. Silicon Valley is essential for this country's economy, for this country's financial viability, and for this country's national security. You think we can compete with China on the National Security Front without Silicon Valley? So this glee that you see in some quarters of the rights and libertarians, this glee in the suffering of Silicon Valley is nuts and suicidal and self-destructive. Well, suicidal is self-destructive, right? So number of consequences if things go bad, right? If nothing gets resolved, and this just continues like it is right now, which I don't think is gonna happen, but one, a lot of companies that have their money in the bank will not have that money or have only a percentage of that money, which creates a lot of uncertainty about paying payroll, creates a lot of uncertainty about paying rents, about investing further in the business, about growing. A lot of these companies are going to struggle, they're gonna have to put a pause on certain of their activities, maybe lose employees, while they wait for this money to be released so that they can pay their bills and grow and pay their employees and all of that. That is a massive risk to the US economy. We'll talk about how the market is dealing with that in a minute. It's interesting that how much we don't need government necessarily to intervene in these kind of cases, because so we'll get to that in a minute. So yes, there is this real worry among people in Silicon Valley, about founders and people running CEOs of startups, how are we gonna make payroll? How are we gonna pay rent? What's gonna happen in the days, weeks, months to come if our bank account is basically frozen or percentage of our bank account is basically frozen? That's a huge problem. This is a massive sector. Again, something like 50% of all the startups are banked by Silicon Valley Bank. This is not a small little trivial number of startups. So that is issue number one. The second issue is a lot of businesses are going to look, are looking this weekend at the bank which holds their deposits and say to themselves, wait a minute, if I needed this money, if other people like me start withdrawing the money, so this is the same logic as the withdrawals from Silicon Valley Bank, other people like me need this money or worried about this bank and they start withdrawing the money. Can the bank pay me back? What is, are there securities liquid and are there securities in such a position where they won't lose money? How much capital do this bank have? So there's a lot of soul searching among business people today this weekend around other banks. It started Thursday and Friday and other banks took hits. But I think there's a lot of thinking this weekend, huh? Should I withdraw my money out of the bank on Monday out of fear that something like Silicon Valley Bank will happen to my bank? And of course, again, that's a self-fulfilling prophecy. If a bunch of businessmen do that at particular bank, there is a run on a bank and other banks will fail. So there is a risk here. We'll talk about how big of a risk there is, but there is a risk here of contagion, of a run on other banks and extensive run of banks. Now, there's only one type of bank where this cannot happen. And those are the too big to fail banks, too big to fail banks. So there are banks in the United States that basically have a designation that all their deposits are covered. Now, this is another one of those government distortions of the marketplace. So some banks in the United States have this massive advantage where all of their deposits are covered by deposit insurance, not 250,000, not 250 million. Anything you put in that bank is covered. Now, there are at least four of these banks, maybe more, but at least four. Chase, Chase, Goldman, City, I think Bank of America, I think those four. So if you pull your money out of one of the smaller regional banks where the deposit insurance only covers 250,000, let's say you have 10 million in your bank account, you pull the money out of there and you put it into Chase, you're safe. Because even if Chase gets into trouble, the government basically has your back. So this is why the whole discussion is about bailout so silly because the bailout is implicit in the whole structure of the system. We know Chase, JP Morgan Chase, Goldman, these other ones would always be bailed out if there was trouble. There's no trouble at these banks, but if there was trouble. So there's a massive incentive to pull your money out of a regular bank and put it into those banks. But even there, there's a catch. Even there, there's a catch. Because what happens there is that there is also regulation that says that none of these banks are allowed to have more than 10% of all the deposits in the United States. It's kind of an antitrust thing. And at least Chase, I think maybe Bank of America, are like a 10%. So if they get a massive influx of deposits, they're gonna have to say, no, we can't take anymore. All deposits are insured in the big banks. I mean, generally, if you want a good risk management strategy, you should have no more than $250,000 in your community bank, in your local bank. Everything above that should be at one of the too big to fail banks. Again, Bank of America, Chase, Goldman, Citi. My guess is that there were a bunch of other banks that you would consider too big to fail. And we're gonna find out where the Silicon Valley Bank in the end is too big to fail as well. But we're gonna see. So Silicon Valley was 16th, so it didn't qualify. But my guess is the top six, seven, eight, nine, 10 banks in the country are probably too big to fail. Certainly the top four. If you have money there, you can have as much money as you want. The challenge is that if we all put our money there, they will stop taking deposits because they will be violating their regulatory mandate. And you see how the system is built in a screwed up way. And the system is built in a way as to create fragility. And the other problem is, we'll get to the other problem of the creates fragility, the big problem of the creates fragility. So those are the two big problems that we face. One is a collapse among startups, which would be devastating. And the second is contagion. A run on other banks, which basically forces the FDIC then to shut them down and guarantee their deposits. And then where did those deposits go? And then what happens to the next level of banks? And then you can see how there's walls. And this gets bigger and bigger. And basically you could, I don't think this is happening, but could wipe out the small banks in the United States. Now this is, what's his name? Ackerman, the hedge fund guy, Ackerman was on Twitter saying, this is what's gonna happen. If the FDIC doesn't bail out Silicon Valley Bank, this is what's gonna happen. We're gonna have this run on the banks and we're basically gonna destroy the entire small banking industry. All right, so those are the big risks. One of the real problems, and then we'll get to kind of what I think are the likely solutions and what's actually gonna happen. One of the biggest problems in America, in American banking, has its roots in the founding of the country. Has its roots in the fact that from the founding of America, banks were suspect. And banks have been heavily regulated. And one of the ways in which they've been regulated, many ways in which they're badly regulated, but one of the ways that creates this kind of risk is the fact that banks were not allowed a branch, were not allowed to grow, were not allowed to go out of their own state and sometimes out of their own county or sometimes out of their own town. Banks were regulated by the state regulators, not by federal regulation. And some states had what was called unit banking. You could have one branch and no more. There were, every bank was in a particular state and therefore exposed to all the risk of that particular state. American banks had no diversification. New York banks were only in New York. North Carolina banks were only in North Carolina. And throughout the country, banks were local. And therefore there were lots of bank runs. Lots of bank failures. As localized economies had problems, the banking system in those local economies collapsed, that filtered into other banks that were holding their deposits. Anyway, the United States has had before today 12 banking crises in its history. And a lot of that is a consequence of the lack of diversification in the banking space. We have too many small banks that are too local, too regional, undiversified. And of course, Silicon Valley Bank is a good example of that. It's not diversified. Now, it might not have been diversified even in a freer market because it's specialized in venture and Silvergate specialized in crypto. Both weren't diversified in terms of customer base. But the rest of the banking system should be much more diversified geographically. Now, over the last 30, 40 years, we've seen banks consolidate and we've seen banks cross state lines. And that started in the 1970s with inflation. States would have these agreements between them. If you let my banks buy your banks, I'll let your banks buy my banks. And all these reciprocal agreements went through the 1970s and 1980s. And then finally, in 1994, for the first time in American history, Congress passed a law saying banks can buy banks anyway. You can branch anywhere. You can open branches anyway. You can be a national bank. You can go from coast to coast. No limitations, no limitations on bank consolidation. First time in American history. And finally, Bank of America could become Bank of America. Bank of America used to be a California bank and then in the 70s and 80s, it became a California Nevada and maybe one of the state bank. But then Bank of America was bought by Nations Bank, which originally was North Carolina State Bank, which then became NCNB as it bought banks that had reciprocal agreements with North Carolina. One of the reasons Charlotte, North Carolina is a big, big, big banking center with lots of big banks is because North Carolina is one of the first states, if not the first state, to have these reciprocal agreements between lots of other states and their banks, the North Carolina banks, including Wacovia at the time, NCNB and BB&T, of course, they expanded. They went out of state, all in their region. Anyway, NCNB became Nations Bank when it started to branch out into these other states. And then when the 1994 act came about, they could buy Bank of America and that allowed them basically to have a, you know, cross-country bank franchise. Very few banks, no banks have ever had that before. They weren't allowed to. Now you have several banks, including City, of course, that's bought banks from coast to coast. You have Chase, coast to coast. So now you have that, but it's very, very, it was very, very, as far ago as become a coast to coast bank, a number of banks have become coast to coast, but that's only since 1994. Banks have been consolidating since then. Not, they've been consolidating fast, but not fast enough and not fast enough because they had overcome 200 years of bad history, of bad policies, of bad regulations, bad constraints. So American banks are not diversified and are still way too local, are still way too dependent on the local economies, local depositors, local businesses. All right, what do I think is gonna happen? We'll go through this quickly and then I'll do your questions. I don't have a lot of time today. We can't go for too long today. All right, but we do, I do want to remind everybody, you have a lot of people watching, 186 people right now watching live. We do have a super chat feature. One of the ways you can support the show is by using the super chat to ask a question or using it just to make a contribution to the show. If you benefit from the show, if you're learning something from the show, if you're just entertained by the show, then please consider value for value or trade with me. Basically support the show through the super chat or through one of the stickers features here. We have a goal of $650 per show. We've raised about 200 so far, so there's 450 to go with 190 people watching right now. That's basically three bucks a person. We could get there. So please consider asking questions at 20 bucks or above. Let's try to hold it to 20 bucks. Armin, thank you. Wow, Armin just put in $200. So that has shrunk the amount of money we're looking for. But if everybody puts in a little bit, we can get there. And if you've got questions on any of these topics, please jump in with questions. If you want to do like Armin and do $200, $300, $500, $100, then feel free to do that as well, but $2 is also appreciated. So that's how we fund the Iran book show. So those of you who are new or might not usually listen live, this is how we fund it. All right, I'm gonna try not to ask you for money too often because we are going to focus on what's gonna happen. So what's gonna happen now? Well, what's happening now, and we know this is happening now, or at least the rumors are this happening now, is basically what the FDIC is trying to do. The FDIC doesn't want to be in a position where it has to manage the bank. It doesn't want to be in a position where it has to work through and figure out how much of the depositors money to give them on Monday and how much to keep and then liquidate all the assets and do all that. The ideal outcome for the FDIC is basically to hand this bank over to somebody else, basically to sell the bank. And it might be that it can't actually sell the bank because the bank isn't worth that much. It might be that in a sense has to give the bank to somebody or give the bank to somebody with some guarantees like the FDIC could be, and it did this after the financial crisis all the time. It could backstop losses. It could guarantee the loan portfolio, certain amount of losses. It could share in the losses with the bank that took over all the assets of Silicon Valley Bank. Not clear that you would need to do that. But the ideal scenario right now is for the FDIC to sell the bank and basically say, look, nobody is going to lose their deposits. We're just not gonna allow that to happen. We're not gonna allow that to happen at Silicon Valley Bank and we're not gonna allow a massive run on the banks to happen. Now you can call that a bailout, but it will be a financial transaction. The FDIC is involved no matter what. That's the way we're structured. Remember, FDIC funds, at least as long as the FDIC is solvent, are not taxpayer funds. FDIC funds are money that they have that is paid into a fund from other banks. FDIC is funded by other banks unless it goes bankrupt. And if there's a massive run on the banks, it will go bankrupt. And if there's a massive run on the bank, and the FDIC go bankrupt, then it becomes a taxpayer issue. Then taxpayers, without any question, Congress will approve a massive bailout. So if we don't want a bailout in a sense of taxpayer money going in to save banks, then what you actually need is to find a way to stop a bank run from happening this week in other banks. What you need to make sure is, to the extent that you can, that the FDIC does not go bankrupt. So what I expect to happen is, one, they've been holding an auction today. It started yesterday. All bids were supposedly in by 2 p.m. East Coast time today, so they're already in. That's what I expect. I expect news to be coming out. I expect news soon in the next few hours. They've been holding an auction to sell Silicon Valley Bank to a variety of different banks. If I had a bet right now on who was gonna buy them, I would bet it's Chase, JP Morgan Chase. I think they're the most solid bank out there. I think the ones that regulators are going to favor. I think Goldman is problematic because Goldman has not done well in kind of its call to consumer banking or kind of taking in deposits and issuing loans. Not a Goldman model that they've been particularly successful at necessarily. But this could be a big way for Goldman to get into that market and maybe prove themselves so they could be bidding on this. But I do think that it's going to be, I do think it's going to be another bank. That other bank will then take over everything and basically guarantee those deposits. Now, I do think the FDAC will probably have to give these other banks some kind, the bank that buys Silicon Valley. And again, I don't think they're gonna spend any money to buy them. I think they're just gonna get them for free. I think the FDAC will give them some kind of downside guarantee just in case because they haven't had the time to go through the loan portfolio to make sure that the loans are good, to make sure that there are no real ugly problems there. What the FDAC will do because the FDAC does look at these things, right? The FDAC goes into these banks on a regular basis and reviews all these things. This is why this is a heavily regulated industry. I think they'll give us some kind of downside guarantee. Basically that'll guarantee all the deposits of Silicon Valley bank. Nobody will lose any money. And indeed, not only that, but they'll be able to withdraw money Monday or Tuesday or sometime early this week. But they won't be withdrawing it from Silicon Valley bank anymore. They'll be withdrawing it from Chase or Goldman or Citi or one of these other banks, whoever lands up buying them. And I think that's what the FDAC is deciding right now. Who's gonna buy it? Then I think what's gonna happen is the FDAC will also come out with some kind of statement saying, look, don't panic, we are gonna set up a fund that will cover losses above 250 million. We're gonna set up this fund with a special assessment from banks. So it's not a taxpayer bailout with a special assessment from banks temporarily. It's not a permanent guarantee for everything, which is temporarily. We have the banking systems back. We are not gonna allow this to become an all out bank run and a catastrophe for the economy. I think, you know, so Janet Yellen today on one of the news show says, we're not gonna bail out. And what she meant by not gonna bail out, we're not gonna bail out the shareholders of Silicon Valley bank. And we're not gonna bail out shareholders of other banks. They take the risk. And if the bank goes bust, the bank goes bust. But she also said, we are gonna stymie a bank run. We're gonna reduce the risk of a bank run. And that means some kind of guarantee from the FDAC, some kind of guarantee from the government to say, your deposits are safe. Don't worry. And to do that, the one, they're gonna have to solve the Silicon Valley bank issue. And two, they're gonna have to indicate that they would solve this issue for other community, small community banks out there that might get into similar trouble. And I think they're gonna do that. Again, whether you like bailouts, don't like bailouts, it's what they're gonna do because they're not gonna allow a major bank run, a major contagion to happen. They have the tools to stop it and they're gonna stop it. They have legal tools to stop it. And again, they're not bailing out shareholders. You could argue the bailing out depositors. Yep. Maybe they're bailing them out more in terms of the timing than in terms of the total amount of cash because I think in Silicon Valley bank, certainly most of these depositors are gonna get their money back. It's just a matter of when they got their money back. And they're gonna do it in the least expensive way possible which is basically to hand it over to another bank to deal with. That's what I think is gonna happen. Now, who knows? It could be that no bank wants them. It could be that the banks who want them have ridiculous terms and the FDIC won't agree to them. It could be that the FDIC will have to figure out some other way to calm markets and to resolve the Silicon Valley bank issue before the market opens on Monday. But we will see. This is the best possible outcome from the perspective of the economy, from the perspective of the bank. And by not basically saying deposit insurance is going to 100% forever, we're eliminating $250,000 limit which we know creates all kinds of problems. I mean the $250,000 limit itself, deposit insurance itself is problematic, creates more hazard problems, create all kinds of other problems. They won't do that. But they will do something temporary to calm markets down so we don't get into this situation where it's in my interest to withdraw their money even though if I would draw their money, it's in everybody's interest to withdraw their money and that creates a bank run. So now by temporarily saying, no, it doesn't matter if you withdraw the money or not, you're gonna be okay. For now, it just lets banks organize themselves to get the liquidity necessary and lets everybody think about whether the banking system is really in trouble or not and it lets it resolve. But let me again say however this gets resolved. And I do think what I suggested is the way we'll get resolved and I think the way it, given the role of government in banking, it's not like the government can suddenly say, oh, we have markets, let the markets handle this, we don't care anymore. You can't do that. Even if you had a laissez-faire president right now, you can't just walk away from the situation you created, government regulations, government controls, government incentives created. You can't just walk away from that situation and say, oh, you're on your own. Plus the legal agreements. The FDIC has a legal agreement. So the government has to do something and the question is how can it do it without creating more damage than it's solving and the way to do that right now, as I said, sell the bank to whoever's willing to buy it and let the new private bank deal with it and if you have to guarantee some of the downside, do it for a certain period of time and get it over with. And do it quickly, do it tonight. Don't let this spill over into tomorrow. I think that's crucial and I think that's what they are working. So all the headlines right now of FDIC working on finding a buy-off SVB and US seeks the stymie bank run risk as Yellen pledges protection. So those are kind of the headlines. I expect the headlines to shift the next few hours as they actually have a solution. Now I just want to highlight one thing and that is how the marketplace actually provides solutions to at least some of these problems, right? And so I want to give you one example, well, a big example of this. So you've got all these startups that have a problem making payroll, might have a problem making payroll because they can withdraw their money from Silicon Valley Bank, all their deposits are there, they got millions of dollars there and they can't get the access to the funds. And we don't know, nobody knows what the solution is going to be to that. There will be, I expect some solution but nobody knows what that is. So what's happened over the weekend? Two things happened. One, the venture capital community has come together, a number of venture capital funds have come together and said, look to their companies, the companies that they support. Look guys, we have your back. We will provide you with loans to cover payroll, to cover rent, to cover expenditures until all this gets resolved. So don't worry, we have a lot, we have money and we will provide you with that financing and a number of venture capitalists, some of the big guys have done that. And so that is a market solution. The bank is in trouble. Voluntarily, we're gonna provide you with backstop. Don't need the government to come in and bail you out like the Trump administration bailed out the farmers or like the Reagan administration bailed out the auto industry in the 1980s or like the Obama administration bailed out the auto industry in the 2010s. We, private venture capital funds will help you. Why will we help you? Because we're invested in you and the last thing we want is for you to go bust because of liquidity crisis. We'll help you get over those liquidity prices because it's in our self interest to do so because we're in this together, right? Second, there are lenders out there. For example, there's a group called liquidity group actually out of Israel, I believe. It itself is a startup, but what they specialize is providing short-term liquidity for startups. They have pledged today $3 billion of emergency loans to startups hit by Silicon Valley Bank problem. And for them, it's great. They get to make these loans, the fairly safe loans because we all know that ultimately these startups will get the money from Silicon Valley Bank just a question of when. They get to establish a relationship with new clients. They get to maybe offer them other business. So you're getting a massive response, positive response from the marketplace to solve the problems of Silicon Valley. So those of you out there who think, oh, this is great, Silicon Valley is gonna be crushed, eliminated, destroyed by this. This is fantastic. We get rid of all those woke nuts. Ain't happening, ain't happening. And you're nuts anyway to want that to happen. These are the most productive people in America and the ones who keep our economy growing. And they're bailing each other out in a sense, private bailouts. I don't think they're gonna come to that, but the resources are there. So we're seeing private responses to this that are heartwarming and positive and encouraging in the sense that the market could deal with these kind of situations. I just wish we had a market. You know, I mean, one of the things that I find in all these Twitter announcements and all these Twitter debates, bailout, no bailout, it's these VCs, you know, they're free marketers until they need to bail out and all this stuff. This is all garbage. At the end of the day, there is no free market out there. We don't live in a free market. To evaluate things based on the standards of a free market when there is no free market, it is just bizarre. All right, so we will take questions, primarily questions on the topic, but I will entertain other questions as well. Let me also note, as I did before, you know, we got a lot of people watching the show. You know, you're getting some value out of the show, I think it would be great if some of you who don't usually watch the show live stepped in and did like $5 or something just to show some support for the show. We have 190 people watching live, you know, with $5 from each, we blow through our goal and that would be huge, but I'm particularly looking for new people. The same people supporting the show here is great, but it would be great to see some new people who don't typically or not typically listening live but are today and here's a great opportunity to show that you gain some value by offering value. It's a trade, value for value. We believe in trade, win-win. All right, Brian says, what do you think of credit unions? Are banks better credit unions worth it for most people or should they use banks instead? I mean, it really depends. I don't see the great advantage of using credit unions. They sometimes have better terms, you get better interest rates or better terms, fewer costs because you're part of the credit union, but generally credit unions are not that big a part of a market, they're pretty small and they don't have a huge impact on what's going on. And by the way, if you wanna ask questions, I answer all the questions that are asked on the Super Chat, so feel free to do it there. I do not answer questions that are just in the chat. Generally, this is how I pay for these shows. So if you wanna ask a question, if you're curious about something, about the Fed, what they're gonna do or anything like that, you can step in and ask a question. So look, the real question you have to ask yourself in terms of what bank you're gonna use is, do I have less than $250,000 or more than $250,000? If you have less than $250,000, then just choose the bank that's most convenient, choose the bank that gives you the best rates, choose the bank that is gonna give you the best service and just use them. If you have more than $250,000, then I generally would recommend go with the too big to fail bank or at least put that portion of the money you're gonna hold in a bank, above the $250,000 in a too big to fail bank so you're secure that you will not lose that. So if you're gonna hold $10 million in an account, then put it in too big to fail bank. All right, Brian, thank you for the question. Ali says, how are you on a leftist friend suggested Robert Weiss saving capitalism book? What do you think about that book? Why too many thinkers try to stick their ideas to capitalism? Saving capitalism smart? Yeah, I'm not sure what the rest of it was. Look, Robert Weiss does not want to save capitalism. He has no incentive of saving capitalism. He doesn't really know what capitalism is. He is a statist. He wants central planners. He wants a state to determine wages. He wants a state to determine allocation of capital. He wants a state involvement in every aspect of the economy. But all of these guys want the credibility capitalism gives to them and they wanna pretend to the world that they're there to somehow, quote, save capitalism when nothing could be further from the truth. And that's why they use the term capitalism. But they have no interest in saving capitalism as in the system of property rights, the system of individual rights, the system of a separation of state from economics. They want the government involved in economics. They don't want it to be communist in a sense of controlling everything, but they want it to be significantly controlling. So, yeah, I mean, Robert Weiss says the world have no interest in saving capitalism. They are morally offended by capitalism, morally offended by capitalism, and they want to destroy it. And one way to destroy it is to pretend to be one. Ali says my company had 0.5, so 500 million at Silicon Valley. Will they get it back? They filed 8K, does that help? No, I mean, filing an 8K doesn't help. I think they will get it back. They'll get most of it back. They probably will get all of it back. We'll know more later today exactly when they'll get it back and from whom they'll get it back and so on. But I do think that they will get it back. Yeah, I mean, it looks like now the Fed is saying that they were going to ease the terms and banks can access the discount window. So the terms of which banks can borrow money from the Fed, they're going to make it easier for the banks to borrow money from the Fed. And that way, use that money to pay off deposits to, again, reduce the problem of a bank run. So we're seeing, again, federal authorities trying to do what they can to prevent bank runs. So that's the discount window. Let me see what else. All right. Yeah, everybody's talking about the best solution for SVB is a merger and to do the merger today. All right, so Ali, I think you'll get the money back. You'll get most of it really soon. You might get all of it. But most likely thing to happen is tomorrow morning, instead of having half a billion dollars in an account in a Silicon Valley bank, you'll have half a billion dollars in an account to chase or some of the bank. Nothing will happen other than the name of the bank where you have the deposit, but you won't lose a dime. John says, given that SVB has branches in other countries such as Britain with their own banking laws, how will that impact what happens? Well, again, it depends on what the deal is. If they're bought, I assume the whole global network will be bought. Basically, it's likely that a global bank will buy them like Chase or Citibank or Goldman. But whatever happens, I think that those other assets, if there's a buyout, will be treated as all the other assets. And if there's not a buyout, then you might get a situation where in every country the assets, the deposits have to be treated differently. I think everybody is working to avoid that. Again, that is why the best possible outcome here is a sale of the entire entity of everything with its assets and its liabilities. Everything goes and everything is still operating as one unit and you don't get this situation where they have to deal with it differently in the UK and differently in the US and differently in Singapore in different deposit insurance laws and all of that. That is gonna be a mess if that happens. When Lehman Mothers went bust, it took literally years to figure out who was old what. I mean, I had money there in a trading account and it took six, seven years before, well, I didn't have money there. I was owed a bonus of some money I made somebody else and they only received the funds about six, seven years later and then I got my money. So it's a disaster if they actually let it go under and actually to sort it all out and figure out, now this will be a lot easier than Lehman, but still the ideal is just to sell it and not have to bother with all these different laws. Ali says, why the Fed doesn't stop increasing interest rates after they saw the disasters effect of, because there's still inflation and the Fed believes, we can talk about whether it's true or not, but the Fed believes that the only way to stop inflation is by increasing interest rates and slowing down the economy and slowing wage growth because if they believe that at least a portion of inflation is a consequence of increases in demand and people having money and being willing to bid up the prices of goods and the only way is to, they believe that the only way to do that is by raising interest rates and raising interest rates, they know are going to have harmful effects. That is, they know that some companies are gonna go bankrupt and unemployment is gonna increase, they will probably gonna go into recession, but they, this is the trade off that central planners have to do. They are trading off all of that damage versus inflation and that's the problem with inflation, once you have it, to get rid of it requires real pain, requires real playing, right? So, I don't believe the Fed is gonna decrease interest rates tomorrow. I don't think there's any chance the Fed decreases interest rates tomorrow. What they will do is I'll provide an opportunity for banks to borrow money from them at lower interest rates but they won't change, so they'll have a temporary window of opportunity for banks to borrow money from them at lower than the regular interest rates but they won't change the structure of interest rates, I don't think. The only way, the only way that once, the Fed made people richer artificially by printing the money, the only way to eliminate the impact of all that printing of money is to make people, in a sense, poorer, is to get that money out of circulation, in a sense, and to make them poorer for a while. At least, again, that is the theory, I'm not convinced that's the case, but that is the theory the Fed is working on and it's not crazy, right? If you print a bunch of money, there are consequences and part of those consequences are ultimately, you have to get rid of that. The effects of what that did. Caleb says, there's a theory in the central bank era after Bretton Woods due to the need to convert US value is now driven by the supply and liquidity of US debt and derivatives overseas, any thoughts? Oh, God, I mean, that's a big, big issue. There's no question that the supply and demand for liquid US assets is really, really big and really, really important because the dollar is the global currency and everybody uses it and it's denominated. So that is crucial and liquidity of treasury bonds is crucial. Everybody in the world uses basically US government bonds as a way to hold safe assets. So yes, it's crucially important, right? I'm not sure what the theory is beyond that, right? That supply and demand for government bonds, US government bonds for the dollar generally is crucial in the world in which we live. All right, guys, we're like $130 short of our goal, way more than we should be, given the number of people watching live, we should be blowing through our goal. We should be at 1,000 bucks of super chat right now. So please consider chiming in if you haven't done this before, you just have to click below on the dollar symbol and sign up and you could support the show through a super chat. Again, this is value for value. You're listening to the show. I do these for free. Most of you, maybe some of you are first time live watches. This is a way to pay for the value you're receiving. You can also support the show on Patreon. You're on Bookshow on Patreon. Subscribe star and you're on bookshow.com so I support, which is PayPal. Evan, thank you, really appreciate it. I know a number of you have done this. Alex, thank you. William, the black, thank you. RDF, thank you. Ginger, thank you. Daniel, thank you. Mike, thank you. Armen, I said thank you and thank you again. That was a big amount. Armen did $200. JPS, thank you. Volta, thank you. So there's a bunch of people who just contributed without asking a question. Thank you to all of you guys. Shazbot, thank you. No question there. Okay, Joe says, did you see that SVB's head of risk management was a seemingly woke hire? Looks like a good example of no go, woke, go broke. I just jumped in. Sorry if you mentioned it already. No, because I don't think it's relevant. I really don't. I mean, he might be a woke hire but Silicon Valley Bank was not doing anything particularly crazy here. And it did, what it did is buy these long dated bonds and it did that two years ago. And he is a new hire, so he wasn't there when they did it. So he's kind of inherited the mess. I do think that they lack of communication but that's a CEO problem and a PR problem. And I don't think it's the head of risk that is the challenge. So again, I think turning SVB into just an opportunity to talk about woke and talk about all kinds of stuff like that and not useful, not productive and not true. The real issue with SVB is an issue that other banks also face and that is the fact that in a rising interest rate environment, your securities put forward the value of it goes down if particularly if you had long dated securities and SVB had them but those with decisions made a while back. They would decision a lot of people made. The decisions that are gonna play out in the US economy because of rising interest rates over the next few months and years in many, many ways. This is just one more domino to fall. There are gonna be many more. This is the reality and has nothing to do with the fact that he's woke or not woke or whatever. All right, all right, still $124 short. Just one buck from every person watching, we make it. A few of you can do a lot more than one buck. Okay, Michael says, why are intellectuals so resentful and afraid of human soul? Why are there concerted efforts to crush it? Well, because they resent their own soul, I think. It comes from a self-hatred and I don't think they consciously think of, I wanna crush the human soul. I don't think that's how they think about the situation. I think they have a low self-esteem. They have a low self-for-god. They have horrible views and their views are so crushing but it's not like any of them hold. I am going to crush the human soul. And some of them are power lusters and maybe they hold it explicitly and they wanna crush other people in order to control them but most of it's just their own lack of self-esteem, their own lack of self-worth. Weiner said, let me just see if there are others on the topic. Matthew says, how much is a book review of Fiat Standard by, I don't know how to pronounce it. Amos, did you see John Cochran full length interview the other day with Peter Robinson about his new book on physical theory of money? I did not. I'm a big, I'm a admirer of John Cochran. It would be interesting. I mean, John Cochran is a huge believer in 100% reserve banking. So he would just be saying right now, told you so, this is inevitable, this is what happens. And he would be right, of course. I don't know how much would I charge for that. Maybe $1,000, it is time consuming to read a whole book. I would probably enjoy it, but yeah, I'd say a thousand bucks, but make me an offer. Enric says, thanks to the bank financial breakdown, of course, Frank says, will Richard Wolfe call this a failure of capitalism? Of course, they really are. I'm sure there are a bunch of people and then they're condemning the venture capitalists and the so-called capitalists for arguing for bailout because, yeah, the venture capitalists arguing stupidly as well. It's just, there's a lot of stupidity about this issue out there. But yes, this is gonna be blamed on capitalism. There's no question about it. It's also already being claimed by the left that this is a consequence of deregulation under Trump. That the Trump administration deregulated, loosened some of the restraints, and as a consequence, this happened, all bogus. This is completely bogus. By every standard, Silicon Valley Bank, a week ago, seemed like a completely healthy bank. It's a certain circumstances that are very, very difficult to predict. Everybody knew that they had these security problems what nobody expected was the outflow and the size of the outflow and then the rapidity of the outflow. And that's very difficult to predict in tomorrow. But yes, capitalism would be blamed for it, capitalists will be blamed for it, startups will be blamed for it, bankers will be blamed for it, freedom will be blamed for it, and regulators, loosening of regulations will be blamed for it. Elizabeth Warren will be out with that tomorrow. Hyron, banks are quiet to mark to market their bonds and investment portfolios. It depends. They have two different categories on the investment portfolios. They have one held to maturity, which they do not mark to market because they're holding it to maturity. So the fluctuations don't matter. The other they do periodically, the others which are, they're not holding to maturity. So these are tradable, they're trading them. They do mark to market over time. Judy asked, so the bottom line, should I be worried about contagion tomorrow? Will social media fuel a panic bank run? Yes, you should definitely be worried about contagion. Yes, social media can fuel a panic bank run. I don't think it'll happen because I think the FDIC and the regulators are gonna do whatever they can to stop it from happening by creating backstops. But we're gonna have to wait and see what happens between now and market open tomorrow morning. But banks opening tomorrow morning. But so yes, I think you should be worried about it. I think the likelihood is relatively small, but you should be, if this is very relevant for you, you should be monitoring the news between now and tomorrow morning to see what the government is doing and what the FDIC is doing. Again, there is an auction. The auction deadline was 2 p.m. East Coast time today. So they're reviewing the auctions right now. They're probably negotiating with a few of the best options. They're trying to find a bank to buy this and if they buy it and then they also come out with some kind of statement about a backstop, I don't think, then there won't be a bank run. Michael says, Switzerland allows, well, let me do, let me do, let me do, let me do, let me do, let me do, let me do. All right, let's just do this one. Buzz asked, whoops, what did I do? I didn't mean to do that. All right, what about Bitcoin? I mean, Bitcoin is flat. It was declining because of Silvergate. But then, when Silicon Valley Bank basically went undone Friday, there was a stablecoin that was linked to Silicon Valley Bank. And that stablecoin dissolved, it basically crashed. So, and I think as a consequence of that, Bitcoin was again viewed as a safe haven within crypto. That is, if you're going to be in crypto, people said, I should be in Bitcoin rather than all these other coins and currencies and so on. So I think Bitcoin and probably Ethereum, I haven't watched Ethereum, of being viewed right now by the crypto community, by people who dedicated crypto, people who are committed to crypto, I think they view Bitcoin and probably Ethereum as safe havens, and therefore they are buying. I don't know what the value of Bitcoin is. I don't know what the value of Ethereum is. But right now, it's not crashing and it's not going through the roof. It's at around 20,000, 21,000, something like that. And I think it went up a little bit on Friday because of crypto people rushing, still wanting to hold crypto, but wanting to be in Bitcoin. But Bitcoin's value is basically determined by people who trade Bitcoin. And what determines for them, the value of Bitcoin? I have no idea. I have no idea. I think it's a lot of its emotion, a lot of it's the, yeah, I really don't know. There is no real basis for doing that. Let's see. Frank says, status, misunderstand risk as predictability, and therefore promote conformity rather than reward as profits. Yes, I mean, risk is not an easy concept to get a grasp on. And the way we measure risk in finance is questionable and difficult and not always an accurate way of it. But there is, they do promote conformity. There is a lot of conformity in markets. And I think the state is definitely one conformity. They want everybody to be the same. It's easy to deal with people who are the same. All right, Michael says, Switzerland allows for doctors to assist in suicide provided it's for non-selfish reasons. How does that even, what does that even mean? Not wanting to suffer and live in misery has to be non-selfish. The non-selfish part is a burden to others. So, and this is perfect altruism, right? So if you can show that you continue to live places and unreasonable burden on other people to take care of you, feed you, clothe you, pay for yours, whatever, then they'll allow you to do the assisted suicide. Otherwise they won't. At least that's what you're saying exists in Switzerland, but that's the altruistic justification of it, right? So if you're just in pain, but it doesn't actually affect anybody else to hell with you. But if it affects other people, now it's altruism, now it's okay, we can kill you. We can allow you to kill yourself. It's just sick, the whole assisted suicide debate is just a sick debate. You know, you should just be allowed to kill yourself and you should, doctors should be allowed to help you. It's none of anybody's business, why? All right, people, one more request I have. First of all, we're $46 short. It would be bizarre if on this show we didn't make a goal. So with $46 short, it would be great if some people pitched in and got there. Second, before you leave, and I know a lot of you are leaving, before you leave, before we finish, please consider giving it a thumbs up. The thumbs up will really help with the algorithm, help promote the show, help highlight the show, help get other people to be involved in the show. So if you value this, what we're doing at all, this is costless, it's easy, you just click that thumbs up button, you like the show and it helps with the algorithm. If you hate the show, if you don't like it, you can always click the thumbs down button, that's good too. But I hope most of you like the show, 190 people or so, 185 right now, are watching, please like the show by clicking the button. Okay, Daniel says, China buying a lot of gold, do you think this will shelter them in the event of Western sanctions, like if China invaded Taiwan? I don't see how, I mean, I think, and I know this is weird to say, but I think gold is overrated. Yeah, it's a secure asset, so, but at the end of the day, why is gold gonna shield them from not being able to sell their goods in the global market? How does gold shield them from not being able to buy crucial stuff like resources like oil and other things? Yeah, maybe they can use gold to buy it instead of dollars, but I don't know that that many people wanna use gold right now, gold is quite volatile these days, but also it's not clear that if there's sanctions, how those sanctions would work, would they prohibit people from trading in gold as well with China? I just don't think that it helps them that much. I think China has to think more in terms of sanctions, in terms of where their dependencies on the West, and they have a lot, they buy a lot of natural resources from Australia, they obviously have, they buy oil, huge oil and gas, all the oil and gas from the Middle East, but they also buy chips from the West, microprocessors, they buy a lot of technology from the West. How would they survive without all that? And of course, what do they do with all their dollars? We saw what happened to Russian dollars and how central banks froze those dollars. China has massive quantities of dollars held basically in US Treasuries, imagine if they suddenly couldn't sell those. China has a real problem if sanctions are imposed on them. Now, so does the West, and that's why it's kind of almost a mutually assured, destruction, economic mutually assured destruction kind of position to be in, and one would hope that as a consequence, China just doesn't invade Taiwan, because it would be, if you think what's going on in Ukraine is bad, it would be unimaginable what would happen if they invaded Taiwan in terms of the economic and standard of living quality of life damage that would occur globally, if such a thing happened. Elsevier says, happy to support your work, appreciate it greatly, do you have any lesser known works on objectives that small G.U. would recommend? Lesson on works on it. Well, there's How We Know by Harry Binswanger. I mean, there's a lot of Leonard Peacock lectures that I would look for and search, but there is How We Know by, there's some work on epistemology in a companion to Ayn Rand, it's a book that edited by Greg Selmieri and Alan Gotthelf. So I'd say those are the primaries. Evan says, have you considered doing your show on Twitter space as I haven't? What would be the advantage? Why would I do it there versus here versus anywhere else? Is there an advantage? Is there a plus to doing it? I'm curious. I'll check it out. I'll check it out. Boas says, likely that interest rates will go down. In the short run, I think zero. In the long run, yeah. Ultimately, the Fed will start lowering interest rates. I don't know when that happens. I doubt it's this year that they lower interest rates. Maybe it's towards the end of this year when we go into a recession and they feel like they have to lower interest rates to get us out of it. Robert says, celebrating my own weekly Sunday evening YouTube series three years as of this month. So Robert Nacer, you can find Robert Nacer's YouTube on YouTube, YouTube series on YouTube. Still a rookie compared to professionals like yourself, but it's been great fun and the more reasonable voices the better. Absolutely. We need everybody reasonable, everybody good to be talking, to be engaged in the conversation, to be getting the word out there. All right, we didn't make our numbers, so thank you everybody. Robert says, meantime, thank you for all the information inspiring and outstanding content and don't ever stop. Thank you, Robert. I don't intend to, although at some point, yeah. Well, thanks everybody. Really appreciate the support. Really appreciate all the listeners today. If you want to support the Iran Book Show, the best way to do it is on Patreon, Iran Book Show. Or if you don't like Patreon, you can use Subscribestar, Iran Book Show. If you don't like that, you can use PayPal, IranBookShow.com slash support is PayPal. But if you really want to support the show, you can even send me Venmo, or you can, what was the other option? Yeah, you can even use Locals. So I don't turn back, I don't turn away funds, so figure out a way you want to support me. I love the monthly contributors, they're steady, they're constant. I can predict, I know what my cash flow is in the future. So really consider Patreon, Subscribestar, or PayPal's kind of monthly contribution. That would be phenomenal. I really, really appreciate that, so thank you. And we will be back tomorrow and tomorrow on my news roundup in the morning. We will have news about SVB that happened overnight. So we will know a lot more and I'll be commenting on that. So see you all in the news roundup tomorrow morning. Bye, everybody. See you tomorrow.