• This article discusses the collapse of Silicon Valley Bank and Silvergate Bank, which have raised questions about whether regulators intentionally caused a run on banks.
• It suggests that government agencies use selective enforcement of regulations to achieve certain agendas.
• The analogy of an apartment building needing to be removed for an upcoming freeway expansion project is given as an example of this tactic.
Economic Headwinds
Global economic conditions are tightening, interest rates are in flux, and inflation has yet to be curbed. Considering these headwinds, it is not surprising that Silicon Valley Bank and Silvergate Bank have broken. But why now? Quickly rising interest rates create disruption to banking models, raising questions about the collapse of these particular banks due to their importance to the crypto industry.
Selective Enforcement
Government agencies often use selective enforcement of rules and regulations to pursue agendas, claiming that public interests are at stake. An example is provided in the form of an apartment building needing removal for a freeway expansion project–where the government can either execute eminent domain or let the property slip into disrepair by not enforcing pre-existing regulations around maintenance and upkeep.
Chokepoint Theory
A month ago warnings were issued about chokepoint theory where it was suggested that they would take down top 3 crypto-facing banks but no one expected them to “go 100x further”. This led many to believe this was not accidental but deliberately executed with certain goals in mind.
Market Conditions
As market conditions begin to tighten, businesses that are discretionary or speculative suffer due their inability to withstand financial shocks; this could explain why these particular banks have collapsed despite being important players in the crypto industry.
Conclusion
The selective enforcement of complicated rules and regulations by government agencies allows them skirt direct accountability while achieving desired outcomes such as shutting down important crypto-facing banks like Silicon Valley Bank and Silvergate Bank amidst tightened economic conditions.