When interest rates rise, the price of long-term assets falls. Consequently, when the Fed began raising interest rates in 2022, the value of bonds and mortgages dropped, causing significant accounting losses for banks heavily invested in these assets. Silicon Valley Bank went bust, for example, because depositors fled upon realizing it was holding lots of […]
Bailouts Forever
Bailouts Forever
02 Jun 2024 Leave a comment
in business cycles, economic history, financial economics, global financial crisis (GFC), macroeconomics, monetary economics, politics - USA Tags: deposit insurance
Debate: Abolish Banking Insurance?
10 Nov 2021 Leave a comment
in applied price theory, applied welfare economics, business cycles, economic history, economics of bureaucracy, financial economics, great depression, Ludwig von Mises, monetary economics, Public Choice Tags: deposit insurance, moral hazard
Debate: Abolish Banking Insurance?
18 Feb 2020 Leave a comment
in Austrian economics, business cycles, comparative institutional analysis, economic history, economics of information, economics of regulation, financial economics, industrial organisation, law and economics, macroeconomics, monetary economics, privatisation, survivor principle Tags: bank panics, bank runs, deposit insurance
NZ deposit insurance had $2b in claims because it included finance companies
27 Jan 2020 Leave a comment
.@cwcalomiris “Thinking Historically about Banking Crises and Bailouts”
20 Jan 2020 Leave a comment
in applied price theory, business cycles, econometerics, economic history, economics of information, economics of regulation, entrepreneurship, industrial organisation, law and economics, macroeconomics, monetary economics, politics - USA, Public Choice, public economics, rentseeking Tags: bank panics, bank runs, deposit insurance
Champ and Freeman on bank capital reserves
05 Dec 2019 Leave a comment
in applied price theory, applied welfare economics, business cycles, economic history, economics of information, economics of regulation, financial economics, global financial crisis (GFC), great depression, great recession, industrial organisation, macroeconomics, monetary economics, politics - New Zealand, Public Choice, survivor principle Tags: adverse selection, agent principal problem, deposit insurance, economics of central banking, monetary policy, moral hazard, prudential regulation
The day Minsky macroeconomics died! Instability can’t be fixed so easily?
23 Nov 2019 Leave a comment
in budget deficits, business cycles, economic history, Euro crisis, financial economics, global financial crisis (GFC), great depression, great recession, macroeconomics, monetarism, monetary economics, Public Choice Tags: asymmetric information, bank runs, banking panics, deposit insurance, economics of central banking, Keynesian macroeconomics, moral hazard, Post-Keynesian macroeconomics
35 years later: Diamond-Dybvig model of bank runs
16 Oct 2019 Leave a comment
in applied price theory, applied welfare economics, business cycles, comparative institutional analysis, economic growth, economic history, global financial crisis (GFC), great depression, great recession, income redistribution, industrial organisation, law and economics, macroeconomics, monetary economics, property rights, Public Choice, rentseeking, survivor principle Tags: bank panics, bank runs, deposit insurance
V.V. Chari testifies on modern macroeconomics and information prerequisites to predicting the GFC
09 Oct 2019 Leave a comment
V.V. Chari testifies on the information assumptions of modern macroeconomics and the risk of financial crises
03 Sep 2019 Leave a comment
Utopia, you are standing in it! 
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