Economy: How high interest rates and digital currency collapse has led to a bank run

This could get ugly very quickly:

At Silvergate the problem was a run on deposits that began last year, when clients — cryptocurrency ventures — withdrew cash to weather the collapse of the FTX digital-asset exchange. After losses from rapidly selling securities, the firm announced plans Wednesday to wind down operations and liquidate.

Silvergate, Silicon Valley Bank Fallout Spark Wall Street Fears of Crisis – Bloomberg

Update: That did get ugly very quickly: Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits (cnbc.com)

and

First Republic leads regional bank rout as Silicon Valley Bank crisis raises fears about bond losses (cnbc.com)

This is a big deal. SVB was a $209B bank. Lots of VC funded tech startups kept their cash there – and will not be able to make payroll next week. No one knows what’s going to happen – but next week could be a blood bath.

This all calls into question the Fed’s goal of crashing the economy by hiking interest rates to infinity. SVB is said to have failed due to the value of its bond holdings collapsing and interest rates spiked. Further hikes could ensnare other banks that would then also collapse. This is a scary time with echoes of 2008 and 2009.