Hey, and welcome to What Future. I'm your host, Joshua Topolski, and we're back, of course again. I'm looking out my window right now. This is like, um, I think a Trotsky. There's a famous story about when he was I think he was killed. Well maybe I just made this up, but in my in my imagination, Trotsky was sitting at his writing desk. He was looking out at a beautiful sunrise or something, and then somebody took an ice axe to his head or something and killed him. Very sad. But anyhow, I was just looking out my window here where I record the podcast. I have a view out into my backyard, which is just forest. It's just trees, and and it's has been snowing all day, and there is several inches of snow on the ground here in just outside of New York City. And it's a cold, windy, classic winter day. And it's fucking six days away from the beginning of spring. Actually, when you listen to this, it'll be four days away, because we're recording this Tuesday, and the show is released at the strike of midnight on Thursdays. The clock bells ring out and then immediately our editor Adam goes to an arcane ancient computer and pushes a large red button and the show is dispersed to the Internet at midnight. So anyway, but you know, it's been a tumultuous few days for the economy. You may not know this, but there's been a lot of fear, uncertainty, in doubt about our banking structures in America because Silicon Valley Bank, a well known and presumably well well I need, a bank of the VC elite, has gone belly up, had been taken over by the government, and there was of course great fear of a contagion that would plunge us into eternal darkness, not unlike the Last of Us post apocalyptic nightmare world, where we would be forced to befriend a child and take them across the country on a harrowing journey with a very dark dark end. Maybe or not, I don't know, because I haven't seen it, and that's not a spoiler, And if it is a spoiler, that I apologize. That was completely unintentional. Anyhow, with all of this banking calamity, I thought we should have an expert on the show, so I called up Felix Salmon, my old pal Felix Salmon, who is the chief financial correspondent at Axios, and he's also the host of Slate Money, which is a Slate podcast, so he's got Slate in Axio. It's a very lucrative situation, very shrewd. Anyhow, Felix is here. He's going to explain this banking crisis to us. Actually it's not a banking crisis. Is gonna explain the the near banking crisis and help us all understand the future of money on planet Earth. So let's just get into it. So it's all over. The bank crisis is in the past. It is we solved it. Biden has once again swooped in and exactly Janet yelling to the rescue. Okay, So Phelix, I should just say before we get into this, you're podcasting, you're a correspondent. You're writing. I mean, you just wrote something yesterday, so you're writing on a regular basis. I'm writing many things, and I have a book coming out on May the ninth called The Phoenix Economy. You have a book coming out. You wrote a book during all of this. Yeah, what's the book about? Before we get into this topic, I'm curious, what's the book about? It's it's basically how the pandemic caused all manner of weird, unpredictable things to happen, like minor banking crisis. Is that good or bad? Is your book like pro pro the current state of the of the economy? I call it the new normal? Right? You know shit's getting weird. It is weird, right, I mean it is weird because actually this is a great example. So so the reason I'll just get into it. The reason I wanted you to come on is to talk about this SVB Silicon Valley bank collapse and then the ensuing panic. But that's not the only weird thing happening in terms of economics and the way money flows around the world, and a lot of weird shit is going on. And do you take that? It's like, and we'll get into some of the weird stuff. I do you think it's a positive or negative? It's weird, bad or good to you? I mean it's good if you're a financial journalist. Makes makes your life a little more interesting. Right, There's a lot of shit to talk about exactly that keeps me employed. Will you just take us through a little bit of explaining what happened? Everybody knows this bad got like basically shut down and taken over by the government. But I don't know if everybody who's listening will have understood how this happens. Can you give us a little bit of what the big news around SBB was, just if you could explain it. Like, like, I'm five years old. So the first thing you do when you're five years old is you watch Mary Poppins, Yes, very good, which is one of my favorite movies. You're an American, you've seen Mary Poppins, right, Well, Mary Poppins is a Disney movie if I'm not mistaken, And so now the original, the original Mary Poppins with Dick Van Dyke and Julie Andrews, Yeah, that's a Disney film anyway. Vandyke is an American. Am I crazy? Dick Van Dyke is Americans and he has a terrible, terrible accent. Just because it's set I like this that you're taking ownership of it set in It is set in England, right, but it is set in England. It does Julie Andrews, who's undeniably England and Rex Harrison absolutely a Disney production. But anyhow, go on, first forwarding through the question of the nationality of Mary Poppins. Yes, there is a really lovely bank run in Mary Poppins, and everyone talks about it's wonderful life. But Mary Poppins real really nails the mechanics of a bank run. If a lot of people all want to get their money out from a bank at the same time, the only thing that the bank can really do is just shut its doors and closed down, because banks don't have everybody's money just sitting two hand and right. Technically, all of those individual depositors are allowed and within their rights to ask their money back at the same time. But if that ever happens, the bank fails because there's just not enough money to pay them all back. Right. Yeah, The size of the bank run at Silicon Valley Bank was completely unprecedented. The largest bank run in American history was Washington Mutual in two thousand and eight, which suffered a bank run of sixteen points something billion dollars in ten days, so call it one or two billion dollars a day. The bank run at Silicon Valley Bank was forty two billion dollars in one day. Yeah, we have never seen anything like it. That's crazy. No bank can survive that, and therefore it didn't survive that, and it wound up getting nationalized. No, you say no bank could survive that. JP Morgan couldn't survive that. Well, maybe JP Morgan forty two billion. But the point is that JP Morgan is too big to fail, so nobody would try to take their money out with JP Morgan, right, because the whole point about two big to fail banks is they're too big to fail, therefore they won't fail. Therefore you don't need to worry about them failing. Right, Therefore you don't need to try and get your cash out now before everyone else. And those banks are actually there's a way to refer to those banks in the grand scheme of the economics of this that they're called what the what is the term? It's like g sibs g sibs, which means global systemically important banks, Global systemically important banks. Okay, And so JP Moore is a g SUP which means it's too big to fail. Silicon Valley Bank was not a GCUP. It was small enough to fail, and it did fail. Right. It's funny because when I did my startup many years ago, all of the vcs who funded it were like, well, you've got to open an account of Silicon Valley Bank. That's the bank that everybody uses. The weird thing about this, and I know this isn't true. I know there was an enormous amount of money in Silicon Valley Bank, and it was a very storied bank with very serious clients. But it always felt a little flimsy to me. Just calling a bank Silicon Valley Bank just to me said suggested that it could fold very easily. So I was only a little bit surprised, doesn't I mean, when you think about Silicon Valley, what I think about his companies like Yo, I think about like things like Yo. You remember the app Yo? I not only remember it, I think I might even still have it on my phone. You're an early investor in Yo. But frankly, I don't know if people even remember it. It was all it did was you could send a message to someone in the message was Yo, and they could send a message back, I believe, and it was also Yo. Is that correct? That's correct? Yeah? Right? And they raised ten I think ten million dollars, at least ten million dollars on the basis of this concept of Yo. Yeah. So Yo as a service Yo as a service. Right, And I'm sure that was the headline of an article that you wrote in twenty What gear is that twenty thirteen or something. So I need to ask you as someone who actually did this. You had a start up, you had VCS. They invested some quantum of money which I'm going to assume it was more than two hundred and fifty thousand dollars, it was more than two or to fifty thousand surprisingly into your company. You then deposited that money at Silicon Valley Bank. Yes, we got a check and then we put the check into the bank. Right. Did it ever occur to you that you were lending Silicon Valley Bank a whole bunch of money interest free, and that this was an unsecured liability of Silicon Valley Bank, and that really you ought to worry about that. You know, Well, the answer is no. But and I assume that for the most people the answer would be no, Right. I mean I assume that if you asked anybody, or even VCS or the founders this question, I presumably they all would say no. I didn't feel like I was giving them alone. I'm putting money in the bank where I keep it to be used for my purposes. But you bring up an interesting point, which is, like my perception of money, and perhaps this is just me. I think for humans in this age, the concept of money, it sort of doesn't exist the way it used to, right you. Actually we're talking about the people would go to the bank right in Mary Poppins, where they go to the bank right to get their money. Right in the nineteen twenty nine people went to the banks to get their money that was there, or their jewelry that was in a lockbox somewhere or whatever. I don't think we think of money like that. So the check is like this like totally weird piece of paper that represents something. Then it's sitting somewhere, and our money is like wildly distributed across all of these different credit cards and services and you know, automatic payments and things, and so I feel like money itself, I think it's become much less of a real thing. Like no one even takes cash anymore. I mean, you live in New York, right, Like you know what it's like. I mean you used to go to restaurants in New York and they were like, we only take cash, and those are like gone now. As I just think money has kind of disappeared as a concepts why like NFTs could be as valuable as they were at one point, because it just seems like, well, it's just as good as money. It's just like a thing. No. I have a chapter in my book about this actually, which is basically the way that money is this thing. I think I compare it to tomato seeds. Every time you try and get a grip on the mint like slid its away. It's hard to understand money. It's hard to get a grip on money. But one thing that happened during the pandemic, I don't know if you remember this, Towards the end of the pandemic is Russia invades Ukraine and the US government decides to retaliate by basically confiscating all of Russia's money that it has on deposit of the New York Fed. Yeah, I remember this violate. It was only like a year ago or something. Yeah, it was a year ago. And this like completely undermines this whole concept of like having was money being something you can own, Like suddenly you can have I think Russia had like seventy five billion dollars or something on deposit of it just disappeared. Right, I mean money is not real. I mean this is a well known thing, right, I mean this is money is just a concept. I mean money is a necessary collective fiction. If it didn't exist, we would have to invent it. I really love what direction you're taking this podcast. Just really do you hear? This does get you a little bit of SVB fails? What was the other bank that failed? I'm like, it's it's great. They sat Signature, they got lost in the shuffle. They're like small potatoes by comparison. These two banks fail. And then it's Friday, right, I think it was Friday? Is that correct? Last Friday? Technically SVB fails on Friday and Signature fails on Sunday, right, Okay, this bank collapsed and then Monday morning all of the banks started dropping, like all of their prices started just falling off a cliff, including big banks like Schwap stuff. Right, And this is just pure fear. So what causes that? So two things caused this, and it's impossible to disentangle them because all we're doing is looking at one thing, which is the stock market. And if money doesn't mean anything, stocks mean much less. And there's always dangerous to try and read too much into stock prices. If you look at the share price of First Republic, you know, it went down by you know, seventy percent on Monday, and it went up by fifty percent on Tuesday. Like, these things bounce around enormously, and reading too much into share price moves can be dangerous. But broadly speaking, what people were scared of on Monday was that if Silicon Valley Bank can fail, if Signature Bank can fail, then other banks can fail too, and so we should sell any bank that might fail. And more broadly than that, there is a banking crisis. Like you know, you have three banks closing down within like four days. If you add in Silvergate, right, that is not normal. Between them, they had four hundred billion dollars of assets. This is an absolutely enormous number of assets in closed banks, unresidented since the global financial crisis. Right, So there's a banking crisis. It kind of stands to reason that if there's a banking crisis and in bank bank trucks are going to go down, Right, that's the first order thing. The second order thing is just they used to be up until a few weeks ago, We used to live in a world where people like Josh Tapolski could keep a couple million bucks in the bank and not really worry about it. It would just kind of sit there and no one ever really worried about how much of that is insured, how much of that is uninsured? You know? And now people are realizing that lending money to banks is risky, and what's more, it is actually much more attractive to just take that money invested in t bills which yield five percent and that is risk free. Right. Why would you get zero percent on your money in the bank account, which is risky, when you can get five percent on your money in a risk free treasury bill? So right, right? What is happening is that a whole bunch of people, either in reality or just like this is what the stock market viered, removing their money from banks, from deposit accounts in banks and putting it somewhere else. And that is bad for banks because deposits are very cheap sources of funding for banks, right, And if banks lose that cheap funding, then they will be less profitable. And then again it stands to reason that their share price will go down. Right, I mean this all makes sense. What is the origin of the banking crisis as you see it? Because I mean, it is interesting that the last real I guess, the last major banking crisis, what we say was two thousand and eight. Would we say that was like when there was a real definitely very much in the expectation he or the fear. Rather much of it ginned up by, like weirdly by people in Silicon Valley, like vcs like Jason Calcanus, who were like literally absolutely panicking on Twitter that he had to buy guns and oil now or something. Jason was the Jim Kramer of twenty twenty three. You know, it's shouting, They don't, they have no idea. How about it is out there just screaming, screaming like a maniac. Meanwhile, the government like very nonchalantly was like, don't it's fine, we got it. We'll cover this, like yelling, jumped it. It was like, it's fine. Even after the government was like we're gonna handle it. Don't worry, everybody's gonna get their money, people were still panicking, like for reasons I can't quite explain, except that they don't I don't know, they don't have anything better to do. Or they want to incite panic, they want people to be panicked, you know. Sort of the point about the bank stocks and their prices dropping, It is a lot of like fear of things happening that motivated. I mean, fear is often motivating the way the market moves. Surprisingly strangely, you would think there'd be some way to not do that. There are only two motivations for the way the market moves. Josh, it's fear and greed. You know that. Yeah, But so what is this banking crisis? Like, what is the root of this? Where does this come from? Why are we at this point? So depends how far back you want to go. I want to know. Actually, you tell me how far back, and you go to trace this crisis they were experiencing right now. So I would go back to more than the decade of zero interest rates from the federal which created this huge flood of liquidity into tech broadly and crypto in particular. And this idea that money was worthless and you couldn't get any interest on your money. And this was true for over a decade, right, and it was a specific policy of the federal there. It's called z zero interest rate policy. It's just in any way spurred by two thousand and eight, or is it connected in anyway or yes, yes, this is this is the fed's attempt to goose the economy in the wake of the financial crisis. Right, So you could go further back if you really tried, Yeah, you could go yeah, but let's start with the Yeah. What ZEB does is it causes a huge amount of money to wind up sitting in deposit accounts, especially at Silvergate and Silicon Valley Bank, where no one cares that they're not earning any interest because there is no interest in this world, and no matter why you keep your money, it earns no interest. Right. And what's more, vcs are raising huge amounts of money because they're like, you know, get rich quick and all of this kind of stuff. So all of that money that flows into VC funds from big foundations and endowments and suffering wealth funds and all of that kind of stuff winds up flowing into startups and crypto companies. And all those ups and crypto companies need a bank account, and the vcs all given the same advice, which is the same advice they gave you, which is just opening the account of Silicon Valley Bank Cilicon Valley, Yeah, except for when Silicon Valley Bank would look a scance at people who are a bit too crypto and say like, we'll take pretty much any any startup, but not if it's too crypto, right, And then those people weren't wound up going to Silvergate. So what you wound up with was basically, you know, on the order of three hundred plus billion dollars of deposits which were all you know, the result of equity funding from vcs, just kind of sitting in these accounts waiting to get spent. Right. Then what happened is the Fed started raising interest rates. Those deposits started looking like, why are they earning zero percent when I couldn't be making more in treasury bills. And at the same time, all of the VC funding started drying up, and there was a crypto winter, right, and so the crypto winter people all started needing to pay out dollars, the tech startups all started needing to pay out dollars. The deposits therefore started going down quite significantly. And when deposits go down, what the banks need to do is sell their assets. Now what were their assets? Their assets were longer dated bonds that they had bought. Unfortunately, what had happened is they bought those bonds when interest rates were low. They are now selling those bonds when interest rates are high. And Josh Topolski is a master of bondmath. You can tell me what happens to the price of a bond between if you buy it when interest rates are low and sell it when interest rates are high. Well, I would assume the value of that bond goes down to the potential buyer. I assume they want to paid lasts for it. That's exactly correct. And so what happens is these banks wind up losing money on their bond sales. And in fact, if you mark their bond holdings to market, it looks like the banks were insolvent. The banks look like they're insolvent. Depositors will start panicking. Peter Thiel starts a bank run, and right, you know, and the rest is history. You said they look like they're insolvent, are they not? Is that just an appearance? So it's a kind of weird existential question. Right, if you're a bank and you have a bond and you're intending to hold it to maturity, and that bond will pay out one hundred dollars when it matures. As far as you're concerned, that is one hundred dollars On a long enough timeline, it's one hundred bucks. Yeah, it's like, you know, the whole point of a bank is that they invest through the cycle, right, and then if suddenly an emergency happens and you have to sell it and you can only get eighty three dollars for it, then shit, you're insolvent. But you're only insolvent when you're forced to sell. If you're not forced to sell, you're not insolvent. You're saying, those bonds are like if you look at the value of them and go, well, this will be cashed out at some point at the face value. The bonds were issued by Fannie Mae and Freddie Mack, and you know entities that have zero credit risk. Right, you know you will get paid back, There's no doubt about that, right, unless you need to sell them sooner exactly right, unless you need to sell them when the interest rates are high and they are not fully mature, in which case am I understanding this correctly? In which case things go very badly. Yes, this is fascinating to me, I mean, it also seems obvious. It seems obvious, seems like banks shouldn't do this. Seems like there's a way for banks to prevent themselves from doing this. I'm not an expert, but is there a mechanism, Yeah, by which a bank like Silicon Valley Bank could have prevented totally itself from becoming or appearing insolvent at the time when everybody started drawing their money out. So one of the things that could have done is not go eight months without having a chief risk officer. That would have been smart. Maybe it could should have listened to regulators who maybe the regulators should have been a bit more firm about don't take that kind of interest rate risk. There are lots of ways that banks could avoid taking massive amounts of interest rates. They can invest in floating rate bonds instead of fixed rate bonds, they can put on rate swaps, they can you know, there's like, this is not rocket science. Every bank knows this. For reasons that remain a bit unclear, Silicon Baldy Bank did not do this, but yes, totally they A lot of this was unforced errors on the part of SVB. Right, So unforced errors but also has a lot to do with the mentality of the people who bank it. At SVB, there's a there's a thread doing the rounds, which I'm sure you've seen of this guy kind of gone I forget, you know, it's on Twitter and he's sort of like, oh, here's my story about the last few days. And it's like Wednesday morning. I wake up and I go into my you know, slack with hundreds of founders, and they're all panicking about the banks, like they're panicking about um silver Gate. Yes, so they're panicking about silver Gate or whatever. They're like, what about SVB or something like that anyhow, and they're all like, we should take our money out of here, right. He takes his money out and then correct me if I'm wrong, but he then buys h A's an SVB. Yes, He's like, this is temporary and SBB is a good investment. I'm get taking my money out now, but I know it's going back up because this is there's nothing to worry about, even though even though literally the reason I am taking my money out is because there was something to worry about. The bank run is happening because of those conversation. Oh the bank run. Yeah, they are the bank run, right, Like those people are like, we gotta get out of this, and in doing so, it's a self fulfilling prophecy essentially. Right. Yes, but this guy, yeah, he bought shares that day he took his money out, and he's like this it'll be it's crashing now, but it'll be back up him that he was like, I made I made a mistake. It's like, well, I think it could have been several mistakes. But but but do the I mean, do the do the customers of SBB. I'm not trying to focus my ire on you know, Silicon Valley or or founders or vcs. I mean, it's not like anybody deserves to be in a situation where, you know, they have like the kinds of problems people are having when this bank sort of became insolvent. But I mean, did they bear some responsibility? Man? This is like if all those two hundred founders or however many and there were, that was once in the only group chat. I assume if they just hadn't pulled their money out like this wouldn't have happened. It would have all have been found right, Yeah, it was absent the bank run Cilicon Baldy Bank would would still be pootling along quite happily, like they'd be fine. Those bonds would be sitting there accruing value over the long enough timeline to be worth whatever they say they are, and we would just be there as having a normal afternoon when not talking about this at all. SCB, like, you know, it might feel like it needed a bit more capital. It might you know, have actually been able to do the capital raise it announced it needed funding VC funding. It might have had a couple of years of losing money, but that was okay. Banks can lose money for a few years. Look at credit squeets. It's lost money for every year that I can remember, and it's still going. That's why I say that all the time to people. I said, just take a look. I don't. I wasn't aware of that. Actually, that's interesting information. I won't be doing it. I would have bet any bank with them. Okay, But here's a question. Now. First off, the contagion worry, there was a big concern, right like that. Then the reason why all of these banks are eating crushed on Monday. Now they're way back up. If you had just bought some shares. By the way, I want to be clear, I'm in no way ever giving financial advice. But if a person had just bought some shares, like I was, like, boy, if I had just bought some schwab, you know, when it was way down on Monday. On Tuesday, I'd be looking pretty good. But the fear was this is going to create a domino effect and all of the banks, or many of the banks are going to end up in the SVB boat. Two questions here, One is like, is there still a risk of contagion? And if not, or if so, even how do we fix this problem? You take them in whatever order you want. Yeah. So the reason why the government stepped in on Sunday night was because there was clearly a risk of contagion. The steps they took on Sunday night with their attempt to fix the problem. By Tuesday morning, it was more or less apparent that they had succeeded in fixing the problem, and therefore the stunks went up. You're just speaking to the meme I assume of the guy right, the weird the weird like humanoid guy with the three D the stunks guy sk So we're good. We solved it. We fixed it. We don't have anything to worry about, is what you're saying. Like SVB can fail, it's not a big deal. Well, no, SDB failing is a big deal for the Silicon Valley ecosystem, right, As you know, the poor vcs, they don't have a lot of imagination. They only know that one bank exists, and they tell all of their company, their portfolio companies, to go put all of their money into this one bank. If that one bank fails and like literally just doesn't reopen or just like winds down under national ownership, right, that would be a real problem for Silicon Valley broadly because they would need to find another bank, and apparently that's beyond their can. Right. The definitely other banks in the area, though apparently there's only one. Judge that I've been, I've been reliably informed there's only one bank in Silicon Valley. I've been. I've been to that part of California, and I can tell you I've seen multiple branches of all sorts of different banks up there. In any case, the overwhelming likelihood is the Silicon Valley Bank will end up getting sold to someone or other. It will reopen under new ownership, it will be owned by Barkley's or Truist or JP Morgan or Goldman Saxe or someone else or maybe or maybe Elon Moscus. Someone suggested, I feel like, did I see this? Am? I imagine that somebody was like tweeting in him, going like, maybe you should buy SVB? And he and he replied saying I'm open to the idea. I hope to the idea. Yeah. The fucking guy incredible stuff. I can tell you there is exactly zero chance that the FDIC would allow him to own a bank. He's so good at running businesses. I think this is there is also like it does kind of need to be a bank. I would be shocked if SVB got bullet by a non bank. Right, maybe Jason Calcanis could run it. See how he does Every time you sees eddy fluctuation of the numbers, he just loses his shit, just complete madness every twenty four hours. Okay, So, but is it good? Have we fixed like the banking crisis? Like concept? Are we? Are we no longer and in danger of I mean, I guess like I'm asking this and I'm wondering. Part of me is just going, are we just totally admitting that money is absolutely meaningless and made up and like doesn't there doesn't really hit there's no real value except the one that we are all, you know, sharing in the illusion of like it feels like rights, just like, hey, here's look at you. You're getting You're getting onto logical again. Joe, Well, I just think it's interesting. I'm a big fan of money. I think it's great for purchasing things, which is my favorite pastime, shopping, the American great American pastime. But one, have we solved any future banking crisis just by the fact that you know, the government can step in and handle it. You know, what do you think this banking crisis was? It turns out a lot easier to solve than the two thousand and eight banking crisis, right, right, The two thousand and eight financial crisis was based on absolutely enormous real losses around the planet. There was a credit crisis, and a lot of people lost a lot of money. Right in this banking crisis, the only people who really lost a lot of money were the shareholders of Silicon Valley Bank and Signature Bank, And there weren't that many of them. And they'll be fine, right because they were all diversified. So yeah, so the stakes are much lower this time around. And it turns out that the federal government with by extending the FDIC guarantee to all of the deposits in Silicon Valley Bank, not just the insured ones. The FED opening up its discount window to you know, the other banks that people were worried about, like Chua and First Republican people like that seems to have done the job right. So yeah, I think, you know, like, without getting to ontological, we you know, we had a crisis. The crisis as of Tuesday afternoon seems as though it's more or less than the best. Yeah, there's a kind of, um, I don't know if it's what you call it. A rumor comes some thinking that the FED will cool its rate hikes because of this situation. Is there any indications that's actually true or that that would make any sense? You know, I'm sort of an armchair observer to all of this. Obviously I care about the global economy and certainly the US economy, though I'm of the mind that whenever things are bad, it's just a matter of time before they're good again. I don't know about you, but when the markets having a bad day. What I don't do is look at any investments that I have and think about how poorly they're doing, because it feels like ultimately a waste of energy. The first thing you should do when it comes to looking at any investments you might have is never look at how they're doing. There is a lot of empirical research showing that the more often you look at your stockport vidio, the less well you perform. Um. Sure, I mean, I don't know if that's true. That sounds like a lie that you just made up, But no, that is true. That is actually it's it's a core finding in behavioral finance. But to me, it feels like if you just look, if you just look at the history of the of the markets. I mean again, I'm not giving anybody advice, but for me personally, I just think, well, the line is going up. It's just constantly going up over a long enough timeline. And I'm I've still got a few years left. So you're you're a baby, Josh, you have a decades ahead of you. I'm a young man. I've got at least a few years. I will answer your question about the FED, yeah, and the answer is that at the margin, credit conditions and monetary conditions are slightly tighter now than they wear a week ago. All of these banks that you know have suffered deposit withdrawals, uh, that much less likely to lend out money and they wear a couple of weeks ago. And it's therefore conversely that much more difficult to borrow money to start a business, to invest in your business, whatever. So that is exactly what the FED is trying to achieve with its rate hikes. So in one way, the market and the little baby banking crisis we just had has done the Fed's job for it, and then the Fed doesn't need to be quite as aggressive because the market is already doing it. Oh, I say, interesting, Do I think the FED is going to just stop raising raids? No? I mean, like if I had to bet. Part of the problem here is there in this quiet period. The rate decision comes on the twenty first, and they're all meant to just shut up in the run up to the meeting. So we don't really know what they're thinking about this crisis and what its effect it's going to be on monetary policy. Right, but in general, do they care about Silicon valley startups? Not really. They're interested in the broad economy, which still seems to be pretty hot. Inflation still seems to be well above where they want it to be, and so yeah, we'll probably see another quarter point, right Like, But I mean, Silicon Valley is not like a Bellweather No, no, it really is not. I mean it's it's the economy of Silicon Valley in the in the startup world is completely deranged by comparison to I mean, you know this because you know all these people and you've covered this and read about it assuredly. It's just a I mean, what is it, like ninety percent of startups fail. It's it's people are dumping enormous amounts of cash into things that are inevitable failures. I mean it's it's so it's like, I feel like it doesn't indicate much of anything for the rest of the country or the world, right correct. The one thing we do need to underscore is that SVB did not make bad loans to startups. Well, if it did, that wasn't the problem, right, No one is. No one is saying that like they lend a whole bunch of money to you know, Adam Newman and Elizabeth Holmes, and they lost all of their money, and now right and now their bust. Right, that was not the cause of the problem. Now, those people had the money and lasted. It wasn't like the bank gave it to them. Right, Like, those people raised a lot of equity capital. They did not raise a lot of debt capital, because lenders are smarter than that as a general rule, right, right, correct? No, I mean I'm not I mean I wasn't suggesting that. I'm just saying that the entire world of economics there just seems deranged by comparison to the rest of like exactly, like there's a there's a class of person who will give money to a company that is a ninety has a ninety percent chance of failing, and that class of person is called a venture capitalist. That class of person is not called a lender. Like no lender would ever do that. No, that's actually the strangest thing really when you think about it. There is no expectation that they'll get the money back. I mean for the most part. I mean, if ten percent of those have an axit or even you know, do better than just have a real meaningful liquidity event, it's it's special and wonderful and it helps you know, obviously like shorts up the bottom line there, But they're not lending it. It's being given. Yeah, it's being given. Like I know. I know this because I was given money, you know, to do a startup. And yeah, well yeah, if you actually technically speaking, I think if you look at the term sheet, yeah, it will have been in the form of like preferred something something something which technically you owe back. Well, yes, of course that converts in many different ways. Obviously in reality it was equity. It wasn't that. Did the YO founders have to pay back their ten million? I don't think so. It is definitely non recourse right, but that is again not the cause of the SBB failure. So now where do we go. Are we in a recession? No, you're an expert, I am. We're not in a recession. We're not in a recession. Yeah, Felex says it's not a recession. Then it's fucking not a recession. That's it. That's I'm I'm good as far as hearing that. If you if you look at this this wonderful Yugov pole which they've been running every week for like the best buds of a year now, and they come out every week and they ask for two thousand Americans, are we in a recession? And every week a majority of Americans says, yes, we are in a recession, and every week a majority of Americans is wrong. And it's just one of those things where most people are wrong. To me, it's like, I remember what a real ression. I feel like, I remember what a real recession feels like. Even if we were in a recession, it wouldn't be what you call a real recession. One of the problems here is that the last two recessions we've had have both been unbelievably enormous, gut wrenching, massive things, and everyone now thinks, oh my god, if it's a recession, it has to be like two thousand and eight or twenty twenty. It doesn't. Most recessions are much milder than that and kind of no a big deal, right, But yeah, we are not in a recession right now. Yeah, And do you believe that we are going to enter some kind of recession era in the near future? Does it feel like the fear is warranted? Why do so many Americans keep answering this? Yougo of pol on a geological time frame then sure, but like, yeah, okay, yes, someday there will be a recession. Someday there will be a recession, but like it's a mug's game trying to predict when right. You don't feel like the temperature is that hot or cool. Rather, now the economy is still pretty hot if you look at the GDP numbers, if you look at the consumer spending numbers, even if you just look at the inflation numbers, Like the reason why there's so much inflation is because people are out there spending loss of money. Right again, getting back to emotion, there's a mood of like could something be wrong? It's something wrong. Maybe everybody's a gun shy following the pandemic, Like it feels like you're just waiting for the next thing to go wrong. Do you think there's a single thing that could change the attitude of people? Is there some way to get that ugo of pull to shift in a different direction? Like what would it take to convince the people who are wrong about the recession that there actually isn't a recession? So big question. I don't know, if you get aheadser it's yeah, I mean, like I'm trying to think, like when was the last time you remember like a feeling of national optimism and hope and jubilation, like when Wow, Obama was elected in two thousand and eight, you know, I mean react maybe the reelection probably like there people were at least like this is not a one term you know situation, this is this is real. I don't know. I mean when was when was gay marriage? When did that? When did that get Yeah? That was the gay marriage. But like like that, there hasn't been a lot of sort of caused the great celebration in the United States of late right, Yeah, I mean obviously the Trump years were very depressing, um for I feel like even for people who liked Trump, I don't think they were that happy. They were mad. Yeah, the reason they supported Trump is because they were unhappy and you know about things, they were aggrieved and they were like now we can like shout out loud or whatever. And then the pandemic, which was obviously huge downer. And I wouldn't say that by I mean, I like, you know, there's something about Biden. He's just a charming, just a hilarious kind of president just like seems to be seems to be just like floating through everything in a way that it is sort of, I don't know, comforting to some degree. He did a great job here of just like delegating everything to Janet Yellen and is saying like, are you going to deal with this? And she's like yep, and she did well. The value of having really good, smart people around you who know how to get it done is in calculabot. I mean, I mean one of the things I will say this is also in my book. I have a whole chapter about like how Steve Manusian is massively underrated and was actually an incredibly good Treasury secretary. He seems horrible, but maybe he's great. I mean, like as a person, I'm not going to start coming out and saying like, oh yeah, he's made a bunch of really great personal decisions in terms of like who he marries and stuff. But I am going to say, wow, that the if he would in charge during this banking crisis, as someone who you know, used to run a bank, he would have probably done the exact same thing, right, Like he like, it's not rocket science what they do, right. So I mean, again, that's Biden delegating, like you said, to somebody who knows what the hell they're doing, I mean, having somebody in place to deal with it. Not that it seemed to calm anybody down Listen, in California, I think I think it did. Honestly, I think that things are common right, like as we speak on Tuesday, things are common in California. Like it took an extra day of like not really knowing whether any more banks were going to get taken over and nationalized on Monday. When we all woke up on Tuesday morning and there had been no bank failures and it was pretty obvious that there weren't going to be any more bank failures. I think there really was this kind of large sigh of relief, this excellation and even the panic throne vcs in Silicon Valley like yeah, you know, just keep your money in Silicon Valley Bank, encourage people to take it over, and let's try and go back to how we were. Right, they climbed out of their bunkers exactly, took off their body armor. Yeah, they emerge from their bunkers and they were ready to reintegrate into society. It's true though today definitely felt different. In fact, I mean, you know, looking at the market, it's things almost feel optimistic, right, Like it's kind of like, oh, well, you know better than anyone not to really mead too much into one day's stock market moves. But yeah, no, no, I don't. It's it's actually the worst we should as as someone you know, with your day Joe. No, it's true, it is true. It's very important. I have to look at it. If you care about stocks, you know, look at how they're doing over ten years, don't look at how they're doing over twenty four hours. I mean, that's to me that at the base of all of this, and it is like that that, you know, the chat with the founders who are like, oh my god, you've got to get our money out of there. All of this, to me is the world of money, and the world of global economics is one that would seemingly require an enormous amount of nerves of steel, right, and also an analytical perspective on it, right, a kind of very pragmatic analytical perspect because you're talking about potential for you know, huge changes, huge shifts in the economics and huge shifts and in the way you know things are going. But what seems strange to me is that so many of the of the people who are engaging at such high levels even are motivated, still motivated, but there's like almost animal instinct of like running away from or trying to flee some perceived I get it's money. I get it's like you're always trying to protect your money. But it does feel like it shouldn't be so easy to create such panic or such you know, fear so quickly that you can you know, tank, Silicon Valley Bank in again they're responsible for the ultimate reasons that they became insolvent or near to it or apparently but as they're ever affixed to, like the fear, uncertainty and doubt that motivates people like in the market or conversely that you know, greed spirals that we see during your various cycles. No, like we're humans, we're animals where you know, we react on a very gut level to outside stimuli. Like if you don't understand the deeply sort of biological nature of all markets, then you don't understand markets. Right. It seems ridiculous though, doesn't it in a way, I mean, when you get right down to it, doesn't it seem absurd to think about it? Yeah? I mean, yeah, like we're all playing around with this perceived thing that has this made up value, and like if things get scary, we like literally people have tantrums and you know, wrack their own playpen. Well exactly, I mean that's the irony you know, has gone remarked upon ad nauseam of the thing that the venture capitalists were most upset about, being the very thing that the venture capitalists caused. It's like, come on, people, right, well, listen, Felix. I know you have to go. You've got a very important meeting to get to that important but I do have to get to it. You have a book coming out, hunt it. Tell us about the book really quickly, because you talked about a little bit. But I just want to make sure. Tell me about this book and where I can purchase it, and when I can put Yes, you can purchase it wherever all good books are sold, or even bad books. Go to your favorite book, your five feelings book. Well, they definitely won't have it yet because it doesn't come out until May the ninth, but you can pre order it. And it's called The Phoenix Economy, Life, Work and Money in the New Normal, and that idea of the new normal things being very unexpected, unpredictable, and the way that we can try and understand unexpected events as and when they happen through the lens of basically the pandemic. The pandemic turns out to have really changed the world in quite profound ways that I think a lot of people haven't quite realized. This book sounds super interesting and may it's kind of a ways off, so we will be great. You should come back. I'll, you know, check out the book and then we can talk about some of the some of the ideas in there, because I'm actually excited. I didn't I didn't know you were working on this, and I'm excited to read it because part of what interests me about money right now and the way it moves is that it feels like it as a part of culture in a way I felt like when I was a kid growing up and when I was a young adult, even it wasn't in the conversation quite as viscerally or didn't seem to matter quite as much. Understanding these sort of like global mechanicians, and I think there's like some really I mean kind of amazing stories that are that are happening. I think the pandemic has sort of either created or you know, inspired or altered in some way. So you have to come back and we'll talk about your book. I will come back. I will definitely come back, all right. Well, Felix, thank you so much. I now understand the entire state of the economy, and I didn't before. So this is really good. Do you see. That's that's what I'm handful exists. You really have cleared up a lot of big questions for me, so I deeply appreciate it. Thank you so much. You know, I think we learned a lot here today. I think we learned a lot about ourselves and about the world, and about the global economy, and about what fear really means and what fear can really do. And I think, um, you know, we saw it with with this a near banking crisis, and of course all of the characters in the new Scream film also experienced a great deal of fear, I assume before they were stabbed repeatedly. I haven't seen it because I don't know. I feel like the franchise is kind of lost. It's it's whatever it had, it doesn't have it anymore. I will watch it eventually, because I do I do feel like I have, I owe it to myself and to the memory of West Craven to watch it and then say Wes Craven would have hated this. Anyhow, That is our show. We'll be back next week with more what future, and as always, I wish you and your family the very best.