{"id":47,"date":"2023-03-13T16:22:44","date_gmt":"2023-03-13T16:22:44","guid":{"rendered":"https:\/\/powerhedgeglobal.com\/?p=47"},"modified":"2023-03-13T16:22:44","modified_gmt":"2023-03-13T16:22:44","slug":"the-impact-of-silicon-valley-bank-on-the-market","status":"publish","type":"post","link":"https:\/\/powerhedgeglobal.com\/index.php\/2023\/03\/13\/the-impact-of-silicon-valley-bank-on-the-market\/","title":{"rendered":"The Impact Of Silicon Valley Bank On The Market"},"content":{"rendered":"\n
For the past few days, I have been having flashbacks to 2008. I was certainly not as knowledgeable about the capital markets then, but I still recall the concern that I felt when Lehman Brothers collapsed. As the Federal Reserve began to slash interest rates and the Troubled Asset Relief Program was implemented to bail out troubled banks, I knew that there would be unintended consequences. The next several years would eventually prove me right. The Federal Reserve kept interest rates at near-zero levels for over a decade, long after the economy supposedly recovered. As a result, we saw the money supply grow much more rapidly than the economy. I have pointed this out several times before and regular readers are undoubtedly well aware of this.<\/p>\n\n\n\n
The usual definition of the money supply available in a nation is the M2 money supply. This refers to all of the cash in circulation plus all the money that is stored in checking accounts, savings accounts, money market funds, and similar things. Although this is not the most comprehensive measure of the nation’s money supply as it excludes things such as time deposits, it provides a pretty good idea of how much money can theoretically be spent at any given period of time. Lehman Brothers collapsed in September 2008. This chart shows the M2 money supply from that time until today:<\/p>\n\n\n\n