So Fed is gonna print up some bucks to give to FDIC, FDIC is gonna give cash to everyone who had money in Woke Valley bank, and everyone else will be hit by higher inflation? Am I understanding it right?
Partly right (mostly?) but, SVB does (did) have assets on the books and those will be liquidated to cover as much of the depositors as the selling of those assets bring in. SVB stock and bond holders are being told to piss off so biggest hit will happen to anyone that has money exposed to those directly and through things like hedge funds and mutual funds. Some of the money being lent is to cover in the short term until assets can be sold off.
Yeah, basically. But the inflation, while real, is insignificant when compared to the huge dilution from recent money printing for other stuff.
But the bank owners and stockholders (not the account holders) will actually lose their own money. And anyone who lent money to the bank won't be paid back.
So Fed is gonna print up some bucks to give to FDIC, FDIC is gonna give cash to everyone who had money in Woke Valley bank, and everyone else will be hit by higher inflation? Am I understanding it right?
Partly right (mostly?) but, SVB does (did) have assets on the books and those will be liquidated to cover as much of the depositors as the selling of those assets bring in. SVB stock and bond holders are being told to piss off so biggest hit will happen to anyone that has money exposed to those directly and through things like hedge funds and mutual funds. Some of the money being lent is to cover in the short term until assets can be sold off.
Yeah, basically. But the inflation, while real, is insignificant when compared to the huge dilution from recent money printing for other stuff.
But the bank owners and stockholders (not the account holders) will actually lose their own money. And anyone who lent money to the bank won't be paid back.