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Thomas Massie Explains How the Federal Reserve Enabled Silicon Valley Bank's Failure

AP Photo/J. Scott Applewhite

As America's economic turmoil continues to spread fear among consumers and depositors, U.S. Rep. Thomas Massie (R-KY) took to Twitter to explain how the clumsy hand of government — specifically the Federal Reserve — enabled both the "malfeasance" and "failure" of Silicon Valley Bank. 


First, Massie explained the Fed's role as "Santa Claus" by setting and keeping interest rates "artificially low" for years. That spurred economic growth and "nudged" those with cash to spend into venture capital which in turn necessitated an institution like Silicon Valley Bank.

Second, the Kentucky Republican outlined the Fed's "arsonist" behavior demonstrated by its actions that "created $5 trillion out of thin air" for Congress to spend...that did not, in fact, exist.

Third, the Fed then changed hats from "arsonist" to "firefighter," and "came to the rescue to fight inflation by rapidly increasing interest rates" to their highest level since the 2008 financial crisis. Consequently, venture capital startup deposits to Silicon Valley Bank slowed down while the now-failed bank's assets lost value.


Fourth, the Fed is now likely to act as a "trauma doctor," Massie explained, which will see the Fed put its "Santa" hat back on again with the same consequences. 

This equation, Massie argued, is why Americans "would be better off if the Federal Reserve Bank...did not exist to socialize the risks of insiders while distorting our economy, destroying jobs, and devaluing our currency."

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