Government’s Reckless Monetary And Fiscal Policies Led To Silicon Valley Bank’s Failure

Silicon Valley Bank (SVB), the 16th-largest bank in the U.S., collapsed last Friday, becoming the second-largest bank failure in U.S. history after the downfall of Washington Mutual in 2008. Unlike Washington Mutual, SVB’s failure is not due to reckless lending but has much to do with our government’s monetary and fiscal policies. 

Headquartered in Santa Clara, California, SVB was once the largest bank in Silicon Valley. Its geographical location meant that most customers were tech startup entrepreneurs and employees. Due to the bank’s unique customer base, the bank’s recent boom and bust was especially beholden to the Federal Reserve’s interest rate policies.

Three years ago, in response to the Covid-19 pandemic, the Federal Reserve cut the interest rate to near zero and flooded the U.S. economy with cheap

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