World-renowned hacker, internet entrepreneur and political activist Kim Dotcom, accused the US government for creating the illusion of a strong US economy by using the US banking system as a tool for the government.
According Kim Dotcom the US government allegedly pumped the markets with Government printed money and using banks to raise more debt. This kind of strategy only works for a limited time because the more money is printed the higher the inflation raises.
The German-Finnish internet entrepreneur explained that when inflation got out of control the US government or the Feds had to stop the interest free flow of printed money to US banks and increase interest rates.
Kim Dotcom stated that banks which got used to making big profits by manipulating the market with free government money started to struggle without the regular fix.
The 49-year-old Kim Dotcom who was born as Kim Schmitz stated that the US government bonds that US banks bought, including with depositor funds, to qualify for more free printed money and are now toxic assets with the increase in interest rates and the demand for US treasuries drying up globally.
The current crisis for US banks became the results right now, in short, US government driven market and debt manipulation are to blame.
President Joe Biden said that investors/shareholders of failed US banks will not be compensated because it's their fault for making bad investments.
Kim Dotcom noted that in reality the US banks that experienced bank runs are victims allegedly of the US government Ponzi scheme.
Based on the definition of Investopedia, a bank run occurs when a large number of customers of a bank or other financial institution withdraw their deposits simultaneously over converns of bank's solvency.
This is what happened right now with the incident involving the Silicon Valley Bank, a major lender in the US start-up scene focused on Silicon Valley and new tech ventures.
Some of the world's leading tech companies such as Shopify, and VC firm Andreesen Horowitz were listed as SVB's clients. Last March 8, SVB's parent company, SVB Financial Group, announced it had sold $21 billion of securities from its portfolio at a loss of $1.8 billion and would sell $2.25 billion in new shares to shore up its finances.
That's the reason why prominent venture capitalists, including Paypal founder Peter Thiel's Founders Fund, Coate Management and Union Square Ventures, reportedly instructed their portfolio businesses to pull their cash from the bank.
On March 10, SVB's effort to raise new equity or find a buyer had been abandoned, the bank was put into receivership by the Federal Deposit Insurance Corporation (FDIC).
The collapsed of Silicon Valley Bank shakes the cryptocurrency market causing stablecoin prices to swing wildly particularly the price of Circle's USDC.
USDC dipped to $.89 after Silicon Valley Bank confirmed that about $3.3 billion of the reserves backing the USDC, the world's second largest stablecoin were tied up at the failed bank. As a result, USDC's market capitalization has slumped below $40 billion.
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