The SVB Downfall: a Macroeconomic Phenomenon
The real world has a way of confounding textbook economics. Macroeconomics, the branch that deals with the big things like growth, inflation and interest rates, seems broken when used to implement policy. In medicine, a drug is not approved for use if it has potentially serious side-effects. Or, if it’s approved, it is administered with care, in the right doses. The collapse of Silicon Valley Bank (SVB) and the pressure on other US banks suggests that economists still don’t quite appreciate the side-effects of their actions.