Let’s take a macro view of the Silicon Valley Bank situation, and use it to contrast regulated capitalism with free market capitalism.
What neoconservatives have done a great job with is getting us used to the wide fluctuations of the business cycle as if it’s inevitable. It’s no surprise because a heavy cycle works great for the rich who can buy on the cheap after a crash. But the rest of us are left hung out to dry.
Now there are really simple ways to flatten a cycle. In 1933, following the Great Depression, Congress passed and FDR signed the Glass-Steagal Act. This separated commercial banking from investment banking, and created the FDIC. And it had the desired effect, it flattened the business cycle. But in 1999 under Clinton, with the Republican Congress, the first part of this was repealed. So Banks were free once again to be as risky as they wanted. This is what was largely to blame for the 2008 financial crisis.
So just like in 1933 we learned our lesson and we passed Dodd-Frank which had similar protections. But as history continues to repeat itself, Trump and Congress rolled much of this back with the help of Barney Frank actually who sold out to Silicon Valley Bank. Now here we are once again, in a different way, but with more bank failures.
Conservatives, especially Libertarians, like many of us like to criticize the Federal Reserve. But without these basic regulations that they oppose, the Fed becomes the only way to flatten the curve. But the tools that they have come with layoffs and corporate welfare.
Even Adam Smith The Godfather of capitalism admitted that it needed rules to keep it from spiraling out of control. But it doesn’t have to be this way, so vote for good progressives to stop corporations from abusing us with the business cycle.
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