TRASHFUTURE - Banking with the Abyss feat. Nathan Tankus

Episode Date: March 21, 2023

This week, we're joined by writer and Modern Money Network research director Nathan Tankus (@NathanTankus) to discuss the recent events with Silicon Valley Bank. Is the US Government going to insure all deposits? Have we nationalized a bank, but only in service of its creditors? Is this a re-run of 2008, but dumber? We discuss all this, and more, in the following episode. Check out Nathan’s site ‘Notes on the Crises' here: https://www.crisesnotes.com If you want access to our Patreon bonus episodes, early releases of free episodes, and powerful Discord server, sign up here: https://www.patreon.com/trashfuture *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind our website). If you need web design help, reach out to him here:  https://www.tomallen.media/ *MILO ALERT* Check out Milo’s upcoming live shows here: https://www.miloedwards.co.uk/live-shows and check out a recording of Milo’s special PINDOS available on YouTube here! https://www.youtube.com/watch?v=oRI7uwTPJtg Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

Stay down. We want to hurt no one. We're here for the bank's money, not your money. Your money is insured by the federal government. You're not going to lose a dime. Think of your families. Don't risk your life. Don't try and be a hero. Hello, everyone, and welcome back to this free episode of TF. Yes, that's right. Milo's here, and he is announcing which one it is. Also joining me is Hussein. Yeah, what's up? As well as Alice from Glasgow. Hi. And we're very excited to be joined for our episode all about or 80% about the Silicon Valley bank collapse and associated other bank collapses that will probably happen between now and when this episode comes out.

It's Nathan Tennis, the research director of the Modern Money Network and author of a very good substack, which you will link in the description notes on the crisis. Nathan, how is it going now that banks are failing all the time? It's great. I mean, things are never better than this, you know, struggle with writing, and this is the kind of perfect thing. I just put my second piece out this week. So, you know, things are fantastic. I mean, there's some other implications, but that's the main takeaway, I think. Great for my writing. Yeah, you're selling the picks and shovels. At the bank collapse rush. Things are going bad, but the content is very, very good. It's true. This is a horrible time for our country, but the content tremendous.

Riley said Milo is here in a tone of voice as though I had to go away for a while. He had to cool his heels and turn one. That's right. So if you're listening to this in a radio that's sort of like blaring out over the wastes as you sort of like bash open someone's skull and feast on the goo inside, in the time it's taken for us to record this. Oh, you're at the Silicon Valley Bank Investors Meeting. Yeah, exactly. In the time between us recording this and society degenerating into that, you know, sometime in a couple of days, just take comfort out of the fact that we're all having a great time right now while we're still alive. We really are. It's the best.

Absolutely. So what we're going to do is we are going to talk all about this, all about the wonderful and wild series of characters, flubs, misfortunes, and chilling implications of the Silicon Valley Bank collapse. But I do want to handle a couple of news items first before we get into that. Number one, 49% of Americans agree that there should be a TikTok ban on everyone's phone as there is currently for officials in the government of the US and UK. 9 out of 10 dentists agree that TikTok is terrible because it makes you make those recipes you just eat pure sugar. 4 out of 5 nurses couldn't be reached because they were currently doing TikToks about how they just lost a patient. I support this on the basis that I feel like

TikTok is about producing one of the most dangerous kinds of people, which are theater kids, is producing them at a rate that is unsustainable. And in order to stop them and in order to stop their influence on society, we need this app to be destroyed. Yeah, I support this not on the basis of the new Cold War or whatever. I don't care about China. What I do support is the war on cringe. And I think this is an important step in that war. Yeah, I mean, it's too late to reach people who are now in their mid-20s. They have made irreparably off-putting and strange by the fact that this app just strips away half of your gray matter, apparently, if you engage with it. But you know what? There are probably children under the age

of like five or six who've still not seen an iPad, hopefully, who will never be influenced by TikTok and will finally going to have normal people again after 20 years of just the most annoying weirdos that the world has ever produced. Yeah. Anyway, hello, we're all podcasts. Yeah, another item as well. They'll never ban Apple podcasts. They fear our powerful lobby. Another item as well is GPT-4 has now been released. The broad summary is that it is bigger, faster, trained on an order of magnitude, I believe, more parameters, but still tends to confidently hallucinate answers. Examples of it in action... Oh, it's like Jordan Peterson.

Examples of it in action include finding security vulnerabilities in an Ethereum smart contract, which people were very impressed by until it was revealed that those vulnerabilities were from 2018 and were widely known. So it just googled it, essentially. Cool. Also, it's good at taking some tests, but not others. It seems to actually be good at drug discovery, which kind of makes sense for AI. It's also very good that it's like inverse chemical weapons discovery. This is my favorite thing about it. If you give it like sort of two thirds of like, you know, like a chemical warfare, like particle or whatever module, what's the fucking word that I'm thinking of? Whatever. If you give it two thirds of that,

it will fill in the blank with like... Molecule? Yeah, molecule. Thank you. It will fill in the blank with like a totally new chemical agent that also works and will kill you. So that's cool. We've made that way, is here. If only Saddam Hussein, peace be upon him, had that access to this technology, you know? They would never have done him dirty in the Iraq War. That's true. Also, another of our predictions is now coming true in corporate ads for the use of AI. So this is true for Google and Microsoft, which are both rolling out their products and to consumers at frightening speed, which is this idea that your AI is going to be able to,

if you write a short prompt, write a long formal business communication that will then go into an email chain that will be summarized into a very short bullet form by the person receiving it, and neither of you are ever going to see the long formal business communication, which essentially is now just machine language or some kind of a priestly can't that is never to be interpreted by outsiders. So good to see a prediction coming true in almost record time. The computer monk. In fact, that looks like it's sort of taking up a lot of email jobs. Nathan, you tend to be very good at seeing things in terms of whether or not they're inflationary or deflationary. Automating all of email jobs, inflationary or deflationary?

Oh, I'm going to say higher or lower, Nathan. Let's go. The question is, what's the thing after the email job that has the same relationship that email jobs have to the pre-email jobs? Like what's the next thing in the chain? Because the next thing in the chain that gets set off by this might be, you know, even more useless and even more waste of a waste of people's time. So I don't know. I'm going to go, who knows? Well, hey, I guess we'll find out. I think we're right to say, yeah, probably prompt writing or maybe some kind of like a priestly assistant from the 1200. You know what? Actually, I changed my mind. Automating all the email jobs is going to be inflationary, but specifically because we need actually someone to think. I know a lot of email

jobs seem like they don't involve thought, but like a lot of them do. And like the thinking part is important for like coordinating supply chains and like trying to get things produced because they should be produced. And you slap chat GPT in there and who the fuck knows what will happen. But I kind of think a lot of things will break apart. Like what I'm saying is chat GPT, if taken far enough, will cause a global supply chain crisis that makes coronavirus look like a pandemic. So what we're basically saying is we're going to have a version of Project Cybersyn, but controlled by the computer from paranoia, basically. Sure. I just want to go back to your analogy a moment ago. So hang on. So the person who is

like babysitting GPT is the priestly assistant and chat GPT is the priest. No, chat GPT is God. Chat GPT is God. Okay. So wait, so you're the priest if you're. Yeah, yeah. You're a priest, but you're speaking in, you know what it is? It's tongues. We've reinvented Pentecostalism, right? Sorry, because I thought you were setting up some kind of scenario where people are going to start getting buggered by chat GPT. That was just, I just wanted to make sure. Not only a matter of time.

It buggers me almost as well as a real person. Getting fingered by chat GPT, but it can't get the hands right, you know. Too many fingers. Also, of course, it has been doing pickup and someone has tried to Tinder bot based on chat GPT, which includes that's such a Silicon Valley guy thing to do. Just like, I'm wasting too much time on dating. What if I take all of that time and just give it to AI to do? And then I only respond to the women who are interested. So when asked to create a response to a prompt and a dating profile, which was the prompt being LMK when the reservations are made, chat GPT's response was,

hey there, I've got reservations at the cozy corner of chemistry tonight. It's a unique spot where the main course is laughter. The side dish is a sprinkle of flirtation and dessert is a sweet connection. Don't worry, I booked the best seat in the house right next to me. Let's make this a date to remember, shall we? This sounds like if they rebooted American Psycho and obviously made it very bad, this is what the Patrick Bateman character would text. He'd be Reddit. He'd be Reddit, Patrick Bateman. Yeah, of course. From what I saw also, there's like the weird thing that really unsettled me about

the kind of suggestions or all of it. It was less to the text and much more to do with the emojis. Yeah, emojis are out there. The emojis were the thing that really unsettled me there. Emoji use of a Tennessee Lieutenant Governor, you know? Oh, yeah. This twink must be destroyed. I don't want to spend too much time on various news items, but congratulations to chat GPT. You are almost a lawyer. It's fun if they actually start using that though because they're going to end up going on dates with other tech bros who are also using chat GPT to manage their Tinder profile and then they

can all be together. If we can automate the twink and the older politician at the same time, then eventually we can just like that's all computers and we can just sort of like hive all that off. It's perfect, you know? Automatic bussy. We're going to put the twinks in the homophobic older politicians completely out of work like the coal miners. So, okay.

Really automated. Why does this chat GPT keep sending me to Fenboy Hooses? Yeah. That's my last one. So, let's talk about Silicon Valley Bank, the star of the show. And I'm going to start in media res, external, Ohio, headquarters of tech company Strongsuit. Lindsay Michaelides, an ex-McKinsey analyst, walks in and is extremely worried. Hi, I'm Lindsay, a bit about me. Ohio mother of four.

I employ a team of 15 as a startup founder and CEO of Strongsuit. I drive a used Honda Odyssey. My husband, quote unquote, works in manufacturing and the financial future of my company, my team and family are at risk with the collapse of SVB. Of course they are. I'm a Greek. So, the collapse of SVB might look like a 1% problem that only impacts the coastal elite. That's not true.

It also impacts the Midwestern elite. All elite. I started Strongsuit in 2018 with only an idea and lots of hustle to build something that helps working families manage the chaos and move parents from feeling frazzled and failing to feel present to on top of it without settling and opting out of their careers. Now, I'm going to turn to our guest, Nathan. Did you see what Strongsuit actually does and what kinds of thriving businesses are being threatened or were being threatened by the collapse of Silicon Valley Bank?

Strongsuit could be anything. It could be a software that helps you cheat at poker. Really, you could tell me anything about what Strongsuit is and I'd be like, yeah, sure. Sounds right. So, I'll tell you what it is. It's a to-do list startup. It's unclear how it makes the to-do list, but it's sort of you tell it what you have to do and then it makes a list for you.

Number one, take all of my money out of Silicon Valley Bank. And then what it does is it gives you a to-do list and all it costs is $6,000 a year. Wow, it's a bug. Anyway, they've automated your mom. I don't even know if she's automated. It could just be like some- See, the thing is, that's not even a scam. Like, at least a lot of things are scams.

That's just like nothing. That's just- Promises you nothing and delivers nothing. It's sort of like you too can get the $6,000 post-it note. Not this post-it note that we have in the studio. No, no. The only more efficient way to incinerate $6,000 would have been to deposit into Silicon Valley Bank up until Sunday night.

That's absolutely right. So, these are just a few of the kinds of, let's say, dynamos of innovation that the American and world economy could have lost only because of the, I would say, long-term, poor risk management of what turned out, and under regulation, of what turned out to be very quietly, apparently, one of the country's most important banks in some respects. Fantastic. So, what actually, in brief, what happened here?

Well, I mean, do you want me to take a run at this, or do you want the person who knows what this is all about? Yeah, go for it. I could have not easily take a red pen in after and go, Yeah, yeah, yeah, please do. Please grade me. You're the most annoying teacher. Yeah, yeah, absolutely.

So, my essay submission for this one is Silicon Valley Bank, 16th largest bank in the U.S. And by dint of sort of location and sort of savvy in dealing with their customers, became the sort of like house bank for specifically venture capitalists in Silicon Valley and like became, had some sort of like cachet on that basis, like Gavin Newsom's fucking wineries bank with SVB, right? And what happened was a bunch of those Patagonia Gile wearing dipshits in the VC world got together in a group chat in Discord and told themselves enough of a scary ghost story that there was a run on the bank of their own making.

That's my that's my submission. Yeah, I mean, that's that's basically it. I mean, there is real things going on with that we're going on with Silicon Valley Bank. And we, you know, we can touch on that later. But like the main thing is I got a good grade in podcasting, something it's normal to want impossible to achieve. Yes, exactly. And but like those issues existed.

Now, we get into why those issues didn't get more attention from, say, regulators or other people, what where was managing on this, whatever. But the fundamental underlying things going on with Silicon Valley Bank were known. The reason that Silicon Valley Bank was suddenly had problems Thursday and then was taken over by the Federal Deposit Insurance Corporation Friday and then got all its deposits covered on Sunday is because of the group chat and the slacks and the Twitter accounts of, you know, what seems like 100 to 200 venture capitalists. It's unclear which tech platform can take full credit for for the run.

You know, there's differing. Discord painting a big bank silhouette on the outside of their offices. A chat GPT bot on Grindr told me there was a run on Silicon Valley Bank. I mean, realistically, that's actually that's actually not a bad question because it's plausible. Yeah. At some point, someone in the future might need to review some of those some of those message logs to decide who to prosecute.

Yeah, absolutely. So it's a real question. You know, we've the one thing I saw on Twitter, which felt like the most convincing because it seemed the stupidest was a group chat on signal of like 100 to 200 venture capitalists, which I can imagine like what is going on there normally? Like what is the 200 person conversation over a text messaging app going on? Just got a deal on like Columbia Rainproof Jackets. Yeah, can you imagine the incredibly terrible conversations that are happening in that chat?

I hope it's like Russian mom like Easter posting like an incredibly deep fried picture of like Jesus holding the cross on his shoulders and it's like spusky. He died for us. I like to think that it's that they're all just send like good morning gifts to one another because like none of those guys have enough sauce to plan like an eyes wide shot for sure. I bet those guys breakfast update section atrocious. It's like what do you heal, heal, heal, heal. Multiple times a week, you get like 100 different pictures of people's breakfast

and not like a special breakfast. Like sometimes it's just. The nicest view out of the most expensive house you've ever seen and like a bottle of fuel in front of it. Yeah. No, the rule in that group chat is you have to post a picture of the shit you took after the breakfast. Well, yeah.

Well, that's how you know what quality it is and whether you're really following the Silicon Valley lifestyle, which is what my my impression mostly about managing the color and texture of your feces. Okay, so please so we have this we have this group chat of approximately you say 100 to 200 VCs, possibly a signal, but you get that is it's going to be harder to prosecute. I think it's harder to get in there until one of them inevitably betrays all the other ones. And one of the reasons why these guys were so nervous was that Silicon Valley bank itself was much like its clients.

And this is as I'm given to understand it, a real product of assuming that interest rates would stay zero more or less forever. They had 93% of their deposit base was uninsured, which means it was over $250,000 because they only worked with extremely rich people and companies. Yeah, if you're familiar with the TV show Years and Years, you'll be aware that a plot point that it misses is that you have sort of like a certain amounts in your bank account are protected, right, like on a statutory level. In this case, it's like $250,000, another 150 on top of that if it's like distributed

all right, right. And but all of these guys were like VCs who had infinite money and their client companies who they had just given us like a relatively large fraction of infinite money to and who just were like with four guys in hoodies who were like, yeah, fuck it, we don't need a second bank account, we can keep it in this one. That's what the guy who gave it to us uses. And then beyond that as well, right. So they have this undiversified deposit base of people who all face more or less the same

kinds of risks at the same kind of time and at the same time that a lot of their own assets, that they're things that they're holding to maturity, right. These are largely mortgage-backed securities. We're seeing those come back again. Oh yeah, Mogar Robi said something about that. Yeah, remember. And then treasuries, all of which were bought when interest rates were again basically nothing. And so when those went up, the sale value of them went down causing Silicon Valley Bank to

need to raise some capital, which they said to their client base, hey, don't freak out. Everything is fine. We just do need to raise some capital. First of all, don't freak out. The signal chat lights up. All of the shit people have taken that morning wipes off the board. Well, no, they just get runnier because those people are more shit. And so yeah, so it was like, am I okay?

Does my shit look okay? So as I can see it, it was like some poor risk decision making, but not like destroy your bank risk decision making, unless of course, you don't know who your depositors are, were the most treacherous, parasitic pieces of shit in the entire economy. Yeah, I mean, that's happening because the Fed made the economy like 1% harder. As I understand it, what happened is they turned the big difficulty in setting up like one or 2%. The analogy that I came up with for this is like for a long time, we've been in like zero

gravity, right? And what the Fed did was set everything up to like moon gravity. And you know, most of the astronauts are fine. We're like slowly descending a little bit. Meanwhile, this one guy who has been strapping diving belts to himself and is covered in lead weights hits the surface of the moon like he's being attracted to the fucking surface of Jupiter. Yeah, that's basically, that's basically it. That's sort of the context where we've got, we have this world that sort of isolated,

but is built for a zero gravity environment. And then in a moon gravity environment, the main thing holding it together, completely fucking pancakes against the surface of the moon. Yeah. And that leads to a whole weekend of some of the funniest posts I have ever seen from venture capitalists. Venture capitalists suddenly discovered like how we're all in a community together. All are like, all what affects one of us affects us all.

And we need some sort of like social safety net. Some, some, some kind of, what's the phrase welfare state as you will to make sure that the bad decisions of some people were simply the bad luck doesn't, doesn't lead to their complete destitution. And we all should be sort of on an even keel that regardless of our decisions and capabilities. And, you know, it was a beautiful moment where social democracy bloomed in one valve. It was, it was so beautiful because it was all guys who's like at was like something like at Steve because they got in on Twitter early, right?

And had like the legacy blue tick all posting at solid poos 1990. Yeah. This is John Gault speaking. If you do not give me $500 million, I will kill myself. It was beautiful. That'd be a very fun thing to, you know, like Twitter spam bots, like I've been getting a lot of them, which are just like, I am a very pretty lady from Taiwan. My husband is dead.

I don't want, I don't want to remarry. All I need is my pussy filled. But like for, you know, bank accounts. Yeah. Well, what really is there proposing is a version of the welfare state that's sort of analogous to the franchise in sort of, I don't know, like 18th century England. But instead of being a landowner to count, you have to own or have invested in Glorch the subscription condiment service that's profitable because it's hard to cancel.

Yeah. You must still own a legacy Juicero in order to get all of these benefits. I like the idea that there are people making like aftermarket Juicero bags now to service the Juicero community. Like you can buy like a biodegradable Juicero bag, a refillable Juicero bag. I'm actually hearing reports that you can get a loan from the Federal Reserve by pledging an out of date Juicero to them. You just leave it on the steps.

You can get a loan from me to do that. Not as much of one. So anyway, yeah, as we said, the posting is VC's have all been scaring each other with scary stories. And I've got a few of these sort of tucked away. But the other thing that happened is, as we've alluded to earlier, is that the FDIC and the Fed have essentially decided that Silicon Valley Bank, what is technically a regional bank and was immune to other forms of too big to fail regulation and we'll get into that,

is now also too important to fail. And now, and actually this is very amusing, they have been advertising themselves as the safest bank in the world because they have functionally unlimited deposit insurance. And to be honest, they're not wrong. They're not wrong. It's just Hutzpah. But it's not wrong. I mean, Hutzpah often isn't wrong.

Sometimes it's really wrong. But sometimes it's just Hutzpah. I have a theory here to be graded, which is this was a foregone conclusion. President Brandon is never going to let a top 20 bank in the U.S. fail to honor its deposits. And therefore, all this was like a day or two of watching the worst people on earth sweat through their shirts. And I loved it. As soon as I realized Patreon wasn't implicated,

as soon as I realized some of our faves weren't implicated, you know, great, beautiful. And that's the greatest service these guys have ever performed to humanity. You know, fuck Uber or WeWork or whatever. No, it was like those couple of days of me sitting at my computer, like a fucking little goblin going, yes, suffer to a guy who's made more money than I ever see in my life. Yeah, you know, you might be you might be right about that.

But I just want to and obviously we'll talk more about this stuff later. But that's easy to say from the outside. Like put yourselves in the shoes of the like six nerds who have to try to convince Brandon of this over a weekend in the White House. And, you know, he wants to go be doing something else in the weekend. He wants to be in Delaware or something. And they're like, actually, this is very important. I think that they were probably incredibly stressed out going,

how the fuck did we make this man understand from their point of view, understand that this absolutely needs to happen and like trying to figure out ways to like make it sell to him. Like the stuff about this not being a bailout, I think is like that's more important in terms of convincing Biden than it is actually for the public. Like this isn't bailout and we're not using taxpayer money, quote unquote. That all stuff I think is like more important in terms of convincing Biden and like getting him to go along with it than it actually is for like what anything that's actually relevant

to the situation. It's just purely what they like them desperately racking their brains at how they can try to push through what they think needs to be done between his ears. And I bet up until like way later in Sunday than you think, like they didn't think it was actually going to happen. Like I'm like, and ultimately, you know, ultimately it might go that way. But like in some sense, on a certain point, it's just determined by what's between President Barrett, Brandon's ears.

And you know, that's not as like in the system locked in by the structural constraints of capitalism or whatever as we like to believe. And that's like, that's not really a comforting thought actually. Hmm. Don't worry, Mr. President, we've minted a trillion dollar coin and given it to the Silicon Valley Bank. It's not a bailout. It's cool that we can only like manage by sort of lurching from like crisis to crisis.

And if we fuck up any one of them, it's like 2008 or worse again, though. Yeah. And in fact, I think it's worth sort of zeroing in on two subjects here, which I do have later on in the structure, but let's talk about them now. And one of them is we say it's not a bailout. As yet, I'm given to understand that the way this is working is rather than taking some kind of facility from, say, the Treasury. Instead, we're taking a facility from the FDIC that exists to protect all deposits.

And we are sort of slowly, slowly making them whole again. Again, on the assumption that they still don't pull all of it out the whole time, but that instead of charging taxpayers directly, what's going to happen is those costs are going to get passed on to everyone with a bank account through fees and stuff because the cost of deposit insurance are going to have to go up. Is that broadly right? Well, I mean, I think that's, this is kind of a whole other shot. We might just have to do a fucking follow up to talk about this.

I have a third piece in the tank, besides the piece that the second piece I've already put out today that we're not really going to talk about on this. I think the whole idea of a deposit insurance fund is kind of nonsense. And we should do away with all this bullshit. And like, you know, to me, you know, you guys talked to Joe Weiss, it's all about accounting gimmicks. And oh boy, the accounting gimmicks involved with everything that's going to go on that goes on with related to Silicon Valley Bank and the deposit insurance fund and the Federal Reserve

crisis facilities. That's such a, it's such a complex web of accounting gimmicks that like, it's like the Pepe Silvia meme when I try to explain it. And I haven't written the piece yet. So I'm not there yet to be able to explain it off the cuff right now. So it's like, put a pin in that. But what I would, basically the short form I would say is, like, I think the insurance fund stuff is kind of a crock.

You know, if we think, oh, we should trade off the benefits that banks are getting by, you know, cutting into their profits, we should do that in more coherent ways and not do it through convoluted accounting gimmicks where we're like, ah, no taxpayer money, whatever that means. And that's a bullshit concept in and of itself. But it's actually coming out of the deposit or insurance fund. Like we need to do away with all of that, all of that nonsense. And, you know, the bottom line is regardless of, oh, whether you, you know, did a little

bit, essentially a tiny tax where you collected a little bit back from the banks or not, it's always public money coming out the door. And we just need to own that and talk about it. And the, basically all the reason, what happens when you're saying, oh, it's not actually public money, it's not actually or worst concept taxpayer money. All that stuff is just about constructing some kind of accounting gimmick where you can pretend it's not public. And the other thing, right, is, you know, given that, you know, regardless of the differences

between what kind of public money you're using, it's all public money and, you know, it should be considered, I think, as part of common wealth, you might say, right? We can ask, should they, should Silicon Valley Bank have just been allowed to fail? And I'll sort of kick off by saying, I'm sort of, I'm in two minds about it, right? On the one hand, the companies that go out of business are predatory remoras that exist to enclose the free money coming out of the Fed at the expense of everyone else, in exchange for producing basically nothing of value. But also, the broader social order is largely being held together by these remoras.

And there's not really a robust left-wing replacement waiting in the wings. It would just be, it would be one of these things where the building we're in is bad, but if it all falls apart and we haven't built another thing to land on, we would still die. Yeah, reform or revolution. What's your answer, Nathan? Yeah, I think the other thing you would say is, like, there's a lot of things that are giveaways to the rich. The rich have the same amount of dollars in their bank account, especially their company's bank account, that they had the week before, is kind of like the mildest form of doing that. And, you know, the alternative costs,

so like, you know, there's certain things that you do, you know, the rich just straight up get richer. I mean, hey, even sending out stimulus checks and unemployment insurance as great as that is, that's government spending. Government spending is goosing profits overall. There's no additional profits involved here. I mean, Silicon Valley is still sort of screwed itself. It, again, it blew up a bank that was important to important as a source of credit for them, important as like a source of connections and so on. Like, they're less wealthy, regardless of whether they get their deposits back, or whether they, you know, they're made whole dollar to dollar. On the other hand, like, the whole mythology that, you know, bank money is money,

except when it's not, doesn't serve a progressive purpose. You know, money should just be money. You shouldn't have to worry about, wait, is my money actually money and get into a convoluted philosophical discussion when you're just trying to make a payment and then go pick up your kids? Yeah, I'd get into crypto currency if I wanted to do that. Yeah, exactly. And you know, obviously, you know, that's less true for the rich and they have more capacity to deal with those complications. But why should we be wasting anyone's time with that? You know, more multiple companies should have more like, you know, treasurer employees to go think about this nonsense, when it could just be unlimited deposit insurance, bank money is money,

is money, and you put the money in the bank and you don't have to worry. That there are big advantages to that. And like, big advantages is not wasting a whole bunch of people's time trying to manage these complications. And the other piece, which obviously we'll get in more into is it involves admitting what we're actually doing with the banking system. And that has incredible opportunities for pushing forward the political project of making banks work for society rather than the other way around. Well, just to sort of, I'd say, spoil the ending of the show a little bit, I mean, what we what we one of the final implications of this is that, as you say, with the revelation that uninsured deposits are just money, right? They're not this

kind of ethereal asset. It sort of blows a hole in the side of the entire commercial bank business model, or at least that element of it, to say that, okay, well, hang on, how come lending, lending and payment facilitation, and just money storage, how come these are all the same organization? And there's actually a very good argument to be made that for things like postal banking, for or even for things like the Fed just providing these services directly, like, what's the point of having these commercial banks, if all of it is just completely backed up anyway? Sorry, I just sort of feel like, yes, like, yes, meme, yes, about that. Because what really we're talking about is, it is that the banking system overall,

including the balance of payment system, really is a public utility that just happens to only have existed as a series of private businesses, because the less it acts like a public utility, the more crises it creates. And in fact, it created this crisis because companies of Silicon Valley Bank's size and profile successfully lobbied, led by Silicon Valley Bank itself, to be accepted from a number of regulations that would have stopped them from doing all of the things they ended up doing in the first place, causing them to create all of this risk by forcing them to act more like a public utility. Which goes to show why they needed to be exempted from, because otherwise they wouldn't be able to do all that stuff. Yeah, that's all that great stuff

that was so fun. Yeah, and then people's deposits wouldn't have been protected. I largely agree with that, but there is an element of which, like, supervisors screwed this one up so much, like, interest rate risk is so basic, like, a banker a century ago, interest rate risk would have been basic to them, an old hat, and been like, why are you talking to me about this? That, like, if the supervisors can't catch this, then they wouldn't necessarily have caught things with tighter regulations. Like, you do regulations, but you also need supervisors to enforce the regulation. And existing regulations would have been well enough to say, hey, you sure got a lot of long maturity securities on your balance sheet. That seems, and you've got sure got,

you know, so many uninsured depositors. Have you considered doing something about that? And if they can't manage to pull that off, like, are they really going to be able to pull anything off? Like, ironically, the only, like, if now possibly, you know, the law doesn't get changed, and the supervisors keep on doing what they should have been doing the whole time. But like, with the possibility that the supervision would have screwed up, the like one other possibility that the regulations would have been worked is simply like suggesting to Silicon Valley Bank, like, proper risk management. And Silicon Valley Bank would be like, oh, we hate this, we hate these regulations, but I guess we'll try to follow them. And then they try to follow them. And it turns out,

hey, this is actually a pretty good way of managing a risk. Like, these rules make sense. And they managed to avoid it on them. I saw they actually just didn't have a chief risk officer for quite some time. Oh, God, I just rewatched margin call. And that's like basically what happens in margin call. Well, having a chief risk officer is like inviting failure, right? It's suggesting the idea that risk is even an element. So what you're saying is your chief risk officer is the book The Secret? Yeah, no, so what I have is a chief success officer. Of course, the other thing here as well is that the Republican Party has seized on this with the only angle they seem to have left, which is that bankers, this was too woke. They were too busy giving their pronouns

to like handle their interest rate risk and diversify their client base outside of the same 200 venture capitalists wearing a bunch of different hats. That's right. That's the problem with like you can't say you can't. These guys can't do a eyes wide shot party because every time you have to like go through the gate, you have to sort of say your pronouns. Yeah, that's it. And the pronouns is too long now. It's just taking the views. This is fully the anti-woke thing is fully a mental illness at this point in my view. There's no relation to reality. This case is like especially crazy because someone looked into it and it's like six white guys, five white women and one black guy. Like if one black person on a board of directors

can take down banks, like, wow, that's woke. This is really way more powerful than I could have ever possibly imagined. Stop parachuting a diverse cast of senior bankers into China. New Cold War is over tomorrow. Yeah, it's you know, the original statement of like their diversity, like they mentioned that they have two veterans on their board. Like organizations only start mentioning that they have veterans on their board when they have no diversity and they go, shit, shit, shit. Did you all like go to an interesting camp in the Midwest at one point? Can we list that? No, that doesn't count. Unfortunately, unfortunately, their veteran was General Hague. So they imported him from Britain.

And so anyway, so these are some of the basic implications. Also, you mentioned earlier, Nathan, that interest rate risk is so basic that bankers 100 years ago would have been managing it pretty well. But wouldn't you guess that venture capitalists looked up interest rate risk on Wikipedia and are now talking about it with flashlights under their chins on Twitter? It really is amazing. So guys like Bellagie, whose book we've read on this show, basically said, and what a book, that the Fed tricked everyone by not saying a few years ago that interest rates might rise in a couple of years. They made a pinky promise. They made a pinky promise and they turned back on it. And he says, the Fed caused the banking crisis.

Surprise rate hikes devastated the balance sheets of hundreds of banks, not just SVB. Because all of them followed the same guidance and bought the same assets from the same vendor who devalued them in the same way at the same time. Their mistake, they thought buying long dated treasuries and similar bonds in the US government was the safest bet you could make when it actually turned out to be the riskiest. Today, some still think the central bank banks and regulators are neutral referees, but soon they'll learn that they're playing only for their own team. To be fair, it feels like he's kind of like right in a way, but not in the way that he thinks he is. Because we've talked about this a lot on the show about how both in the UK and the

US, they're desperately trying to squash inflation with rate hikes that won't work because that isn't the primary generator of inflation in this case without addressing any of the problems in the economy, which mean that if you raise interest rates, the economy will be on fire. And now the economy is on fire and they're like, hmm, maybe we should put the rates up some more. And Bellagie is sort of, in so many things, has kind of, in fact, he did this with his book as well, arrives at something that's the shape of the right answer, but exclusively through incorrect reasoning. Because he only sees this as a conspiracy against him and other tech people who he assumes are resented by everyone else for their brilliance and success.

And so he said, that's certainly why we resent them. The refs are against me, the mods are against me. There's the broader anti-tech conspiracy that they're talking about. They banned me from Club Penguin for saying the n-word. This includes David Sacks, we've also talked about in this show, attacking Cara Swisher for being insufficiently protected. That's not a real name, surely. We talked about her a lot on the show. I think I remember a name like Cara Swisher.

Yeah. Yeah, she's like sort of the ultimate tech journalist sim. She writes just the like the barest thing about how there might be a problem with some of these guys bullshit. And they immediately go, no, I'm never talking to you ever again. And she's in their mentions. Wasn't she like, I will have dinner with you when I'm in town and talk to you about your concerns and talk through where my point of view is and come to a fair-minded understanding. And he's just like, I got better things to do.

A lot of her career has been spent being like, oh, these tech people are human as well. And I've had lots of dinners with them. And like, I actually know how nice and well like meaning they are. And then online, they're just like, Cara Swisher's a fucking idiot. You know, actually don't trust her and she sucks. To me, it just feeds into this much broader thing about like the kind of paranoid impulse of all these tech guys that is so expansive that they are now, yeah, they now just see them.

They thought they were in like a room full of friends, but they actually realized they're in a room full of sharks and haters. That's right. But they don't know who the sharks and the haters are or whether the sharks are the haters. It's them. Remember, they played a game of the prisoner's dilemma, but where they could all freely communicate and they all betrayed each other, all of them. They played a big game of cock and ball. That is right.

Yeah, they all chose ball and they lost. I'm not, yeah, I'm not giving any more interviews to Cara Swisher. I'm only talking to Keemstar now. Cara Swisher, of course, if you recall, was such a tech booster that in 2021, I believe she advised the average like, you know, Joe blogs to put your retirement portfolio in crypto. Joe blogs, the very famous tech blogger at the time. Yeah. And now we're going to have to come up with some kind of charitable organization to refund all of those people to make a swish foundation.

Thank you. Thank you. Another other fun examples are VCs thinking that all of the people making fun of them are bots and that we've seen the first LLM powered bot army of people. Well, they're terrified of chat GPT. They're constantly doing like the Queensbury rules, boxing motions at chat GPT. Like this thing is going to take over the world. Yeah. But in that, and so this includes one guy, the founder of a company called Flow, saying, I hate to be that guy, but I'm wondering if we're not seeing the first instances of LLM

powered bot armies. I've been on Twitter for 14 years and the object of the mob tens of times, but nothing ever so vicious or so weirdly consistent to the message. The refs are against me. I was hacked. I was lucky I was lagging. There's bots. Yeah. This is just Fortnite. Well, they've got they've got supercomputers that can post the pig poop balls photo at you so many times a second that you won't even be able to log in. And also, right, we've got other other impacts include Ken Griffin taking to the pages of the Financial Times and saying, this is the breakdown of American capitalism. He says,

the US is supposed to be a capitalist economy and that's breaking down before our very eyes. There has been a great loss of financial discipline with the government bailing out depositors in full, to which I would say is again, he's right, but for the wrong reason, right? The idea of what capitalism is supposed to be is becoming less and less credible and what the idea and what capitalism actually is just the unity of capital in the state, right? The unity of people like Jason Calcanus and regulators and also, you know, Kara Swisher, they're sort of people in the media, right? That these people are really on the same team. And there really are a lot of Greeks involved in all this financial mismanagement.

But that they do ultimately exist to we're seeing or see actually is a messaging breakdown in the ideology of American capitalism that is making what American capitalism actually is much, much, much more apparent in my view, starting a new conspiracy theory, the Greek conspiracy, where the Greeks are exacting their revenge on everyone else's economy by infiltrating it with highly placed Greeks who then seed it with the seeds of, you know, financial. I mean, that would be really fair. I mean, I really think, you know, talking about it, it's simply right. But like Greeks, the, you know, people who live in Cyprus, like that, like the Mediterranean periphery of the Eurozone, especially the real peripheral part

of the Mediterranean of the Eurozone, they really in this moment, they've got to be a, they have a lot to be fucking pissed off about. I mean, to look around and go, oh my God, with a deposit, if a deposit, uninsured deposit getting written down, oh, that's, you know, that's going to cause such a big crisis. Like, like, I can't imagine how infuriating this all looks from, from, from, from a few, from a handful of islands in that region of the world. Like, come on. They went through so much, so much like, no, that's impossible. It'd be so reckless. Your banks, da, da, da, da, da, da, da. When it was just like, no, we're screwed over by being in, locked in there in this cage with you. Please, you know, you know, open the, the

freaking bear trap a little bit. And then 10 years down the line that you have a whole bunch of people going, oh, but uninsured deposits, that would cause a crisis. Like, you know, why do, just because it's like a small region of Europe, doesn't mean that they need to, like, suffer a desperate poverty and suicide based on what, you know, now is sort of like, oh, no, of course, we'll have full deposit insurance. Like, come on. If I was, if I was, I mean, I'm pissed off on their behalf. Like, I'm getting so much madder just thinking about this. I've been trying not to think about it because, like, I knew if I thought about it, I would get so angry. I cannot imagine if I was actually Greek or actually.

Hey, when you, when you were dating girls and going to bars, I was studying the financial crisis. So now you come to me to put up a small piece of scaffolding on the outside of your bank. And I say, OK, 250 cash in hand. I honestly, I honestly do think it's worth, it's worth going into that observation about the Eurozone periphery, though, because, right, because it is in relation to what Ken Griffin has said about, you know, the idea of American capitalism is breaking down. It is that it's clear that who gets the bailout. And I think this is one of the implications that we talk about, which is that the bailouts are just how the U.S. does industrial policy. It's how the U.K. does industrial policy or the Eurozone does industrial

policy. And, you know, it's in the principle of it, you know, simply is just that you get, is that the industrial policy is to just keep social reproduction ticking over in a way that works for the ruling class. And, you know, of course, they don't think about it in those terms. They think when they say, when I say keeps social reproduction ticking over in a way that works for the ruling class to them, that is defined as systemic risk and allowing and making it so that Greece doesn't have working fire departments anymore and people regularly die in wildfires in Greek beaches or making it so that, you know, there is like no more libraries in sort of the regional bits of the U.K. or you can't get like a student maintenance loan anymore or, you know,

any number of... Paul Hall destroys your alloy wheel. Or any number of the sort of the blighting of the sort of American former, you know, industrial belt places that sort of died sort of leading up to the great financial crisis and after, you know, it's that those people from are expendable because they're on... They do not need to lay any claim to the benefits or sharing of the burdens of social cooperation in order to keep social reproduction ticking over for the ruling class, whereas the way we have built the economy after the great financial crisis is we haven't done anything, we haven't made anything. The last thing any of these tech assholes built was in... That was remotely touching anyone's life was in like 2014 or 13.

Yeah, the Giussera. And all that they have been doing is creating value by owning companies that do nothing, that don't trade, that don't make a profit, gassing them up in value and then largely passing them around to one another so that transactions occur and they're making what they want to make for one another, which is a thing you can own whose value will go up that doesn't do anything. And, you know, it's that those things, those are the remoras that I was talking about earlier that are just latched onto the side of the economy. They're holding it together and they're the only thing roughly keeping it in the same shape. They're also taking all the

blood out of it and they've basically killed it. But, you know, those remoras need to stay on there if the thing wants to stay together. But like, you know, you might say that functionally, those remoras have decided that it's important that they stay on and that if they fall off, the rest of the thing's going to fall apart. And it just means that, you know, that we organize things, we distribute public money through industrial policy disguised as bailouts in order to keep things ticking over in a way that's terrible for more or less everyone, but great for them, essentially, right? If you want to talk about why Greece gets nothing, why people in Ohio get nothing, why the vast majority of people get nothing, it's because

it's fine for you to suffer for things to tick over in a way that works for them. In fact, it's better, you know, because it means that more of that money is getting sucked up to the top. And that's why I feel so sorry for that Greek woman in Ohio that we talked about at the start of the show. She got the least of all. Yeah, Ohio, the Greece of America, double Greece. Yeah, so then this is essentially how we get this, how we get this set up and what some of the decisions are that are being made. I actually do have another couple of things about the customers of the bank that I wanted to talk about before we go into a few of the implications. This customer was from an article in 2015, was sent to me by Sam Knight from District Sentinel.

This is from The Wall Street Journal. Oh, sorry, excuse me. This is from The Washington Post. TinyCo was in big trouble. The mobile game startup owed $10 million to Silicon Valley Bank, but didn't have the money to pay it off. And the company founder was so stressed he broke out in hives. Then Mark Andreessen, one of the TinyCo's directors, made a call to Silicon Valley Bank and his firm Andreessen Horowitz, borrows from the bank and then Silicon Valley Bank invests in startups to the giant venture capital firm. The bank gave TinyCo six more months to pay the loan and the gamble worked. TinyCo, after all, was able to finish animating the Stewie Griffin character in its family guy game, started turning a profit and repaid the $10 million. That's what it's all

for. A bunch of guys trading Stewie Griffin's back and forth. Beautiful. This is vital to the economy. I hope they send them a Stewie Griffin gift with the repayment. Well, Mark Andreessen, of course, considers it to be a self-portrait, his greatest. Making a Stewie Griffin game asset is to Mark Andreessen, what getting a like a Dutch master painting would have been to an aristocrat of the 16th century. Oh, yeah, of course. It's like Anne of Cleves. Yeah, thinking that Stewie Griffin was really hot and because the portrait is so good, and then you meet him and you're like, oh.

This is one of the things I think I wanted to bring that, one of the reasons I wanted to bring this out now is that as you said, Alice, this is what is being saved because it's important to save the numbers. But if you look at what's underneath the numbers, a lot of what's underneath the numbers is cryptocurrency, Stewie Griffin game assets, Glorp, the sandwich condiment firm, because the businesses are all illusory, but the confidence needs to be maintained. It's that confidence that's the only thing that's keeping a lot of the global North economies going at this point, at least in a growing direction. The one thing I wanted to go for, the one point that I wanted to make here,

I'd like to put this to you, Nathan, is that at this point, the federal government is ensuring all of the deposits and everything about Silicon Valley Bank, and Silicon Valley Bank is still it has been, to an extent, practically nationalized. We've all agreed between ourselves, oh, we should just do this for all banks. It has been nationalized. Every time the FDIC takes over a bank, it's nationalized. We call it receivership because we don't want to call it nationalization for the obvious political reasons, but it's nationalization. It's just a special nationalization of like, square z's. We're not serious about it. We're going to stop this as soon as we can.

We promise, promise. We're not doing public banking. We really, really, really, really promise. It might take a while to go. The private sector really screwed this up, but we're not saying the public sector would have done it better. We're just saying it's a fact. You screwed up. That's why you took it over. Swearing down to the Turkish army recruiter that it's not bottoming. I was just doing receivership. But if it's still being sort of like run for the benefit of the private sector and still being run for the benefit of its investors and its depositors. Well, the investors are wiped out. There's no investors anymore.

Okay. It's just the depositors. Okay. But if it's still being run for the benefit of the depositors, is it possible to say that this sort of like pushes back a bit in the opposite direction? What we've managed to do, as much as nationalizing this bank, is privatize a bit of the treasury, a bit of the Fed? There's an element of that, for sure. I mean, this whole idea to, you know, all right, backtrack for a second, you know, over all over the weekend, there was a huge debate

among all the biggest scholars of banking law and me, some other weird guy on the corner, about whether or not they were going to cover all the uninsured deposits. You know, I was kind of like half right. I thought that they were going to figure out a way to cover all uninsured depositors, but we're going to do some figure out like a creative way of avoiding saying that this is a systemic risk and that they need to do, you know, some big out, you know, the Fed needs to create a crisis facility and invoke systemic risk. I thought they were going to figure out some creative way, but like the essence of that debate is the Federal Deposit Insurance Corporation Improvement Act, Improvement in lots of quotes.

In 1991, the last time we had whole big issues around uninsured deposits, the Fed and the FDIC, you know, covered uninsured deposits in full the last time and Reagan-era, first Bush-era Republicans and Democrats stared into the void, into the abyss of what if we have to do regulation and what if banking is a public utility and the void stared back into them and they said no and declared no. You lose, you lose, you lose. We're not doing that. And so the FDIC Improvement Act in 1991 is a kind of like, no, we're backing away. We're not going to do the public utility thing. Instead, uninsured depositors are going to eat it. Now, ignore that the banking system keeps on getting concentrated, that the big banks keep on getting bigger and become

more dominant over banking. I'm sure that will work out fine. We've dealt with too big to fail. When too big to fail became a term, it was a term for this bank that failed in 1984, Continental Illinois, which was a big bank, but not quite the biggest bank. In some ways that are similar to Silicon Valley Bank, the FDIC covered all the uninsured deposits and everyone in the Reagan-era went, we don't want too big to fail. So let's keep on making the banking system more and more concentrated and larger, but also say we're going to make uninsured depositors eat it. Obviously, and that's not going to turn out badly in 17 years and give or take a few months. Turns out it was bad in 17 years and give or take a few months. And then now we're where we are now

and we're back where we started staring into the same void. But now everyone's saying, well, what if unlimited deposit insurance? And let's move forward on that basis. But hey, I guess that is going to actually have to involve a real regulation. And so that's kind of where we are. The other thing to think about this as well is that there is another piece of evidence in support of the thesis that what the neoliberal state does in the face of crisis is it delegates authority away from itself to supposedly apolitical technical managers, whether that is the Kissinger impulse to sort of start worshiping chat GPT like a God, or whether it's to sort of to try and say, okay, well, we don't want to have public banking because that would be a political thing to manage.

Instead, we're going to have these private regulatory organizations like the Fed and that they are going to be able to have these broad emergency powers. And we just have faith that there's sort of always going to be an emergency. So they're always going to have the tools in their kit needed to keep things ticking over without accepting that ultimately these are distributional political questions. Yeah, exactly. And that's why I'm the spoiler we're working on a book on the Federal Reserve called Picking Losers. There are a few other implications I want to go through before we conclude. One of them is that I think venture capitalist status as bankers in 2009 has now been pretty

firmly, it was coming, right? But this is now I think been their tipping point in the broader culture as being largely hateable as as they sort of spent a long time whining about how much they wanted to receive public money at a time of unprecedented cost of living crises and inflation. Yeah, Anthony Horowitz can't coast by on the goodwill from those books anymore. So for example, the one guy who works for the Solana Foundation, Austin Fedora. No. His name is Austin Fedora, but I've been calling him Austin Fedora. Says, watching people delight in a collapse of a bank that's been vital to the greatest wealth generation in this country has ever seen is really disheartening to me. I think

this is a Twitter problem and I'm going to be spending less time here. Yes, you can say correct. Watching the collapse of the sand that has been home to one of the best houses on this cliff. Quite Trump cadence there, Alice. I think it was a beautiful house. People said you couldn't build it on the sand. They said, Donny, Donny build it on the rock, but he said no. I'm going to build it on the sand, folks. This is Ed Ongueso, Jr. wrote a really fantastic piece of this in slate. Yep, former multi-time guest. As said, I'm just going to reproduce this quote in full because it's so good. He says, for the past 10 years, venture capitalists have had near perfect laboratory

conditions to create a lot of money and make the world a much better place. And yet, some of their proudest accomplishments have attracted some of the most eye-watering sums have been chasing the dream of zeroing out labor costs while monopolizing a sector to charge the highest price possible, creating infrastructure for speculating on digital assets that will be used to commodify more and more of our daily lives, and or militarizing public space and helping the police and military operations. You would be hard pressed to find another parasite that is so thoroughly wrecked the body and the environment of its host, all while continuing to try to convince the host that it is deserving of praise and further accommodation.

Which I want to put to you, the council, and maybe you, the listener, think about this yourself. When was the last time that a venture capital funded product really actually made your life better? And you can even claim that the pre-2015 Zerp darlings, like Uber or Airbnb, may have in some way made your day momentarily more convenient as a consumer if you overlook the sort of deleterious effects in society at large. But even then, 2015 was a fucking while ago. What have you done for me lately? Provide that entertainment of getting owned on Twitter. Hey, we had Quibi. I got a lot of fun out of Quibi. Yeah, but we can decommodify owning people on Twitter. We can fully decommodify that that

doesn't require them to be engaging in any commodified activities. That's a part of the economy that we can make fully free at the point of service. So it doesn't explain why they need all this money. I think it's also partly because venture capital is a fucking terrible way to plan the innovation part of an economy. Because it's just about betting on everything so long as you think you can convince one other person to make a bigger bet than you. Yeah, I mean it's also like it's the stupidest way to run deficit spending because that's essentially what venture capital is. Venture capital is this whole system where no, you need to be making an income to spend. You need to make you making income to spend. Whoopsie. It turns out spending more than your income is

like kind of what you need to do to come up with new products and innovate and come up with new technologies and come up with like actually useful ways of changing the world. And so venture capital is this wave like what if we gave the most arrogant people alive a big pot of money where they could temporarily deficit spend to figure out new technologies but in the most hierarchical ego boosting way possible. But then some point in the future they finally figure out how way to make a profit on that and then oh look they'll make a profit and we can get our money back. The deficit spending can stop and we can you know pretend that this whole thing can run without some actor that is just spending money for the actual goal of improving the world

rather than the goal of improving the world being like a marketing strategy in order to like put like a parasitic fee generating device on top of something that actually is useful or might not actually even be used. And this goes back I think also to the discussion of the bailout. Is it a bailout? Is it not? The fact that it's public money is I think the thing we should be focusing on which is that you know they found the mechanism for these guys right. They can't find the mechanism to for to do the actual things that as you say will cause some of the deficit spending to just pair directly the things that will make the world better with the money right. If you want to pair directly the things that will make the world better

with the money then you have to pair the money with things like food and medicine and housing and you might have to provide those directly for people and or you might have to forgive other debts. You might have to decide that other debts might not incur moral hazard if they get forgiven like for example I don't know student debt medical debt in the States. You might or student debt for especially for doctors well for everyone but especially for doctors over in the in the UK. All of these things would make the corpse that the remoras are attached to a little more alive and a little more held together without the help of the fucking remoras. Absolutely. I mean I'm just so yes meme to everything you're saying you've been saying like it's you know and no that's not

the most helpful thing from a podcast guest but it's like yes. Yeah the British government loves middlemen more than I think any other government in the world. America's given a run for their money right now. I know America does but the way that the British government will find a middleman life the British government had to make a bowl of cereal. They would find four private companies to help them do it one of which would be actively hindering the process at least. Yeah well like like blocking the fridge. Yeah exactly. My understanding is that the third of the country is employed as op-ed journalists and anytime the government makes any decision they have to get like a quorum of op-ed journalists to say that the decision makes sense before they're allowed to

do it. Oh yeah that is sort of actually true. Like yeah it's hazy but that seems to basically be how your government works. I think the thing is right you can make a libertarian argument here which is and I don't want to I don't like doing it but I feel a bit of law. They're gonna make me do it. Yeah no I mean this is sort of a centrally planned intervention and you know you can say like on a on a on a libertarian capitalist analysis you should let shit like this fail. The point of it is to fail and then you know stuff that does work that isn't just steery griffon like filters up and replaces it and all of the stuff that like gets broken along the way that's you know that's for the birds whatever and and you can kind of do that and you can go like oh well this is

just proof that like you know the the US economy is controlled by sort of like Keynesian Stalinists right who are always trying to avoid the crisis who are afraid of the crisis and true capitalism has never been tried and this holds up until you say oh well okay in that case isn't the South Sea bubble like tulip mania like isn't that you know true capitalism well but like sort of yes yeah literally yeah I don't know if there are many people who would like follow that through to its logical conclusion and like no I want to be able to pay sort of like $500,000 for one tulip until what an NFT of a tulip yeah reasserts itself but it's it's it's much like you know it's as you say it is as it is as clumsy as as central planning in a central planned economy that is

kind of dying yeah it is it is a late Soviet intervention in that it is done by a small number of very sort of like worried central planners for the benefit of a handful of people who will not appreciate it and who will probably get fucked by like overriding structural problems in the thing they helped create in the first place very soon afterwards Silicon Valley Perestroika mountain view glass I mean kind of kind of I mean that's that's sort of like that that's the Gavin Newsome angle right is we can we can sort of reform this we contain it into sort of like a worthwhile ideology and we're going to get all the fruits of that and I don't think so there's no there's no like Berlin Wall to fall down here there's just you know at some point the steward

griffin is going to stop going around I want David Hasselhoff singing on Main Street in Palo Alto President Xi if you're listening yeah on on on that exact topic that you were just talking about like there's a whole bunch of you know radical institutionalist economists who kind of talked about that way forever I don't agree with everything they say but it's like useful to look there's this guy John Monkeers who wrote a book like I think it's the 40th anniversary of this book it's like from 1983 or something like that called the transformation of American capitalism from competitive market structures to centralized private sector planning and I don't agree with everything in it but I think that's the right road to go down is like

explore the ways in which this is like a weird like centralized private sector planning system with like you know some backstop so that things like the Fed to like you know lose some stuff back together is kind of like a more accurate even though it's kind of weird to think about way of thinking about this system than like the other kind of mythologies that are sold to us about it and I think also it's just as we close as well it's worth thinking like the threats that if you don't let this happen then this is going to be a rerun of the 2008 crisis you could also say well look the 2008 crisis didn't end for the vast majority of people they're still living in it they still have their lowered standards of living they're not enjoying the fruits of

blorp they might engage with blorp as a product but they don't they don't get paid by blorp if they or if they do then blorp has probably cut their wages significantly my parents were blorp but I don't really practice yeah and so the idea and then and then so this whole idea that that the zero interest rates which were created to keep the thing together without having to do anything redistributive after that crisis that has necessitated huge amounts more central planning in order to force the economy to be capitalist basically or capitalist in the way that we feel is sort of right for it the idea that that this would be a rerun of the 2008 crisis instead of just the same crisis born out very very very slowly with some of its impacts kicked down the road

is I think you know wrong-headed um oh you don't like your wounds well I guess you won't want any more of these little sticking plasters then but we got especially for you before we found out you were so ungrateful and then I think that just brings us back around to the conclusion that I wanted to come to that I sort of highlighted a little bit earlier and this conclusion you come to as well Nathan and your in your sub stack post about this which again I think is worth reading and we'll link which is which is ultimately that they were these same people who were like to pretend that these are two different crises we're pretending that you know that banks aren't a public that aren't really a public utility and we can avoid running them as a public utility but you know if you just

want the last word on this Nathan right like there's sort of no other choice now even though we're going to keep pretending they're not yeah although I would say I mean we're going to see either the shakes out and obviously people walk back statements they make during a crisis after the crisis settles down some um but and certainly people are not going to go the full way like the full way in my vision or my colleague Ron Gray's vision or whatever but I think this is like a real intellectual problem and like for for like a lot of like the people at the highest level um and there is real talk on the table right now about just doing unlimited deposit insurance and if they do unlimited deposit insurance even a lot of like very kind of run-of-the-mill

centrist uh like banking experts banking law scholars whatever are going to be like well if you're going to do unlimited deposit insurance you have to do like a lot tighter asset regulations I think I really think that that is that is coming down the pike and even even even the centrist are going to be like no you have to balance this um because you know the whole the the whole way that like pulling back from the abyss worked in the 1980s was pretending that everything in the saving and loan crisis was just caused by like limited deposit insurance or like you know the expectation that the that the uninsured depositors would be covered so and and not just like hey if you can find a sucker who will who will take on you know the risk of of of your bonds

then you know of your junk bonds which are already invented in that time for that purpose um you'll you'll screw the sucker and do whatever makes sense for your own profit especially if you're willing to commit massive amounts of fraud to do it like basically what I'm saying is yeah yeah basically what I'm saying is like the the the trick that got people pulling back from the abyss the abyss being banking as a public utility um unlimited deposit insurance like brings the abyss back um and you know what you might see a way of trying to reformulate now actually uninsured depositors that undersured deposits that's still good that's still a good system that makes sense but if things go forward on unlimited deposit insurance which I think they

will then it kind then things get like things get interesting I say in in banking law and that's kind of why I'm very gung-ho about unlimited unlimited deposit insurance even though it has the you know unfortunate side effect in this particular situation of making the fucking venture capitalist whole is you know the if if we actually do it if we actually fully do it then the abyss is here the abyss isn't going away and um even the the like quote unquote centrists are gonna come around to fuck I guess we actually have to you know to actually look into what the the assets that banks invested and how much they how much assets they acquire and what are the qualities of those assets and we need to pair that back uh some or a lot all right so I mean

that's why I'm so gung-ho about the situation it's just like yes let's do it let's do it all let's do it live so so you heard it here first the abyss is here points at seagull points at seagull points at bank nationalize fuck this like glass seagull shit we're not tinkering around the edges anymore I think the abyss is gonna be fine yeah the tweet that I saw that I really liked was um I think everyone retweeted was we need to um need to reinstate glass deagle in order to protect the derivative side of the bank from the consumer side of the bank um yeah and that's that's one option the other option is just fucking nationalize all of it you know I'm gays are cool but I'll nationalize the fucking abyss yeah that's right so the abyss is here uh and our advice is to embrace

it uh the in this case throw yourself into the void say we speak in this case we refer to the abyss being nationalized banks say say what you will about the abyss it's a great way to learn about your body yeah that's right throw yourself from the tarpaian rock yes exact the metaphorical tarpaian rock of treating banks as a public utility that was how you became a banker in ancient rome they threw you off the tarpaian rock onto the big tram which was inside the banks of times yeah so Nathan I want to thank you very much for coming and talking to us today yeah I'm glad to be here and glad to stare in the abyss with you so also don't forget to check out Nathan's newsletter notes in the crises uh which is crisesnotes.com and also check out our patreon it's five dollars a

month there's a second episode every single solitary week that is right there is also now we have not been nationalized we are not protected by the fdic and also it's worth pointing out that Alice and I have launched our companion to britannology which is our book club series so it will be it's more of a companion to trash future than a companion to britannology but it shares the same relation to trash future the britannology does yes that's right so now there's not like a commentary show on britannology so britannology is like the britannology yeah exactly explaining britannology yeah so um there's even more on our patreon and both the five and ten dollar tiers for you if you want more of us and our friends in your ears also uh I am in Australia when this comes out I'm about

to leave for the great nation of Australia however if you're not in Australia first wait I didn't know that I I have um I'm bbs on Australia I don't interact with anyone involved with Australia do not do not follow Australians do not read Australian posts yeah because you don't believe Australia is real as I also don't but the Potemkin Australia that the CIA have erected has very good coffee um however first of all even if you're not in Australia I have a special out on youtube called Pindos I haven't actually mentioned it on the podcast at all yet oh yeah but like what we did with the stream and not mention it for several years yeah but still over 20 000 people have watched it so that's great um if you haven't watched it and you would like to you can put

my other words Pindos into youtube it might be in the show notes I don't know um I don't control the show notes uh if you are in Australia I'm doing a show in Perth on the 25th of March the tickets have been selling better than before so thank you to people who have bought tickets however I've still sold not enough do you know how expensive it is to go to Perth from any other place in Australia the answer is very pleased by tickets to that also the Melbourne Comedy Festival from the 29th of March to the 24th of April inclusive but not Mondays please come to shows there you can get all of those tickets on comedyfestival.com.au google it the show is called voicemail it's a good show it's been nominated for an award recently come to that thank you and finally I mentioned that thing

about the stream we are still doing the stream uh so uh Mondays and Thursdays at 9 p.m but not tonight not tonight but no but that's several days ago when you're listening to this not the night that this is being recorded but the night when you're listening to this will have done it the previous night yeah so so I love that all in your diary so work that out yourself anyway uh thanks again to Nathan thanks to our wonderful subscribers and we will see you next time bye everyone bye