Janet Yellen used to head up the Federal Reserve and now runs the US Treasury.
She knows what she’s talking about. With the current banking crisis and the collapse of Silicon Valley Bank having everyone worried, Yellen has been trying to provide some insight.
Testifying recently in front of the Senate Financial Committee, Yellen was asked about what’s going on and how to prevent it.
In the course of her testimony, she dropped some harsh truths about Biden-flation and the current state of the US economy.
I have another question for you
Regarding Silicon Valley Bank crash, Sec Yellen (D) said US gov will back all uninsured accounts, and even insured accounts over $250,000 just like the 2008 bailouts.
WH is saying it’s not a bailout. Pls explain this, or is she not 100% truthful https://t.co/wROBPeMmVK
— Gio DeBatta 🍸 (@GDebatta) March 13, 2023
Shining the Spotlight On Biden-flation
Answering questions from Senator Mike Crapo of Idaho, Yellen admitted that these banking problems didn’t come out of nowhere.
The rate hikes that led directly to the crisis at SVB and other banks occurred as a result of the inflation crisis that’s been gripping the country.
That level of inflation came out of Biden’s policies and heavy-spending ideology, which has recklessly plowed the country into a collision course with reality.
As Yellen admitted, SVB needed to meet its “liquidity needs” fast and so it sold off assets quickly.
The value of those assets including US bonds was down due to rate hikes, which is part of why SVB sunk like the Titanic and shocked the country. Inflation has real costs and includes overall loss of confidence which leads to bank runs.
When a bank needs liquidity fast and inflation has jacked the value of what it’s holding, the result is simple: it collapses horribly as SVB did.
.@MikeCrapo asks if SVB had a liquidity risk issue.@SecYellen: "Well, there was a run on the bank. It had high reliance on uninsured deposits and there was a massive withdrawal of deposits that led to liquidity problems. The bank had to be closed for that reason." pic.twitter.com/G3WCoRghxV
— CSPAN (@cspan) March 16, 2023
America’s Biden-flation Nightmare
Inflation was a problem long before Biden came into office and both parties have contributed. COVID and Biden’s policies injected a massive shot of steroids into the arm of the economy and pumped up inflation like a giant balloon.
Biden’s regime shelled out over $6 trillion dollars in the past two years and brought inflation to the highest level in half a century.
The Fed under Jerome Powell tried to do what it could, upping rates multiple times last year by around 4.5% overall. Powell was trying to keep inflation in check. SVB went down for that reason and its $173 billion in assets lost a lot of value as a result.
Depositors found out the mortgage-supported securities had lost enormous value that was held by SVB; so they did a bank run to try to get liquidity out fast.
If this process occurs on a wider scale, a full economic collapse could happen. Nobody should forget or ignore that Biden’s inflationary policies and game of brinksmanship are to blame.
You can’t hold an economy hostage to high rates and then be surprised when people react in fear and panic to get their money out of banks as a result.This article appeared in StatesmanPost and has been published here with permission.