Biden (etc) will say that it's important to EXCEED the $250K limit for this bank, because of <<insert garbage reason here>>.
Oprah, Harry, and others will be made completely whole, and receive hundreds of millions of FDIC dollars...each.
They will get away with this because the normies do not pay attention until they are personally affected.
And once the 'widespread banking collapse' happens, there will be nothing left in the FDIC coffers.
It will already have been distributed to Oprah, Harry, and other billionaires.
Sound theory?
I think that you are tying the two things together erroneously. Here is my understanding.
Banks crash because depositors want their deposits. Bank does not have the money if every depositor wanted their deposits at the same time because it was loaned out.
I think that banks are able to manage under normal situations because all/most depositors generally don't withdraw their money all at once. Also, loans get paid back, but the cash flow is staggered. I.E. my mortgage payment is not due on the same day as yours - not really the business model but the principle stands.
Some are bad investments and default occurs.
Dollar valuation is separate. Let's go back to the mortgage situation. You and I got loan for our homes.
Let's say you are a good risk - gainfully employed, responsible, mortgage payment for your home is less than 25% of your take home pay.
While I am a crappy risk. I took out a loan on a house way beyond my ability to realistically pay. Eighty to ninety percent of my take home needs to go to pay my mortgage - the bank wrote the loan to me because it had a very, very loose credit policy. I default - 80 to 90% is unsustainable for me.
Now, the $$ is gone. It is tied up in the house - so there is at least an asset. Not sure how or even if the loans at SVB are secured in the venture capital world.
BUT, none of this changes the value of the dollar.
The value of the dollar is changed by the money supply. If the FED prints like crazy, it would mean that there are too many dollars chasing to few goods - inflation.
If the FED contracts the money supply, the value or purchasing power of the dollar increases.
The FED can get away with printing dollars mainly because of our petro dollar status. Oil must be purchased in dollars. BUT, if oil could be purchased from Saudi Arabia in currencies other than dollars, the theory is that there would be a glut of dollars on the market as countries move to the new petro currencies. Massive inflation!
Of course, this assumes that the U.S. would not fight tooth and nail to keep the petro dollar status. Remember, we were willing to blow up a pipeline which provided cheap gas to an ally (so they didn't freeze) and was owned by a nuclear power.