What is interesting to understand from this SVB crisis is the spark that catalyzed everything.
1.- Silicon Valley Bank decided to change its strategy and invest in long-term financial assets (10 years) instead of short-term ones (months). Those investments were done with customers' deposits during the pandemic when interest rates were around zero, so their customers were getting no APR for those deposits.
2.- The Fed decides to raise interest rates to fight inflation and consequently the deposits lose value as now there are other products in the market offering better APR, so customers decide to start withdrawing. The same solution from the past (increasing interest rates, creates the same problem it did 90 years ago and forced Franklin D. Roosevelt fire chat speech. (minute 1:25).
3.- SVB is forced to sell those 10-year bonds at discounted prices in order to let its customers withdraw their deposits bringing the bank to insolvency and forcing the Insurances to take control of the bank.
History repeats and repeats, back then ppl were purchasing gold or keeping cash, the difference is that now we have "out of the system" assets and the world is much more interconnected. I foresee the start of a rollercoaster year...
Thanks for the highlight points and yes, history repeats. THe only way out of this predicament happening over and over, is to move to alternative systems that will self-regulate on the fly en masse, rather than having a few heavy hitters control everything.