In the weeks since Silvergate, Signature, and Silicon Valley Banks’ respective failures, observers around the world have found ways to classify each collapse as the result of specific, isolated circumstances. But our hosts at Onward see something much different: a systemic, likely global crisis in the financial markets, playing out very close to what we projected in our November 2022 episode, “The Great Deleveraging.” In a direct follow-up to that episode, join Fundrise CEO Ben Miller and co-host Cardiff Garcia for an analysis of how the recent bank crises are strong evidence that The Great Deleveraging is in full swing, along with a forecast on what is likely to happen next for the economy — a phase that Ben has deemed “The Great Cascade,” as the impacts of the liquidity crisis reverberate across multiple sectors of the market, with profound effects.
Ben and Cardiff kick off the episode by analyzing what their initial Great Deleveraging thesis got wrong and what it got right. For instance, What’s significant about the fact that the crisis has first appeared in the world of mid-size, regional banks? As Ben points out, one of the major details he’s observed since November is that Dodd-Frank was rolled back from this specific contingent of banking in 2018 — and now that’s exactly where problems have concentrated.
In this period of “The Great Cascade,” Ben has been doing research by speaking directly to banks, first-hand, just as he did leading into our November episode. He’s found that the past few weeks have seen financial institutions scramble to hoover up any remaining liquidity in the markets, and lending has virtually stopped. The first salvo of regional bank failures has triggered a true period of fear, aversion, and uncertainty in the markets. And those are precisely the forces that feed every downward economic cycle. There’s even an event on the horizon that Ben believes is likely to be the straw that “breaks the turtle’s back — toppling turtles, all the way down.” Listen to the episode to find out what that straw is likely to be. (And listen to the original Great Deleveraging episode, if you need a refresher in turtle cosmology.)
There is, however, a silver lining: The way the crisis has manifested so far indicates that it will unfold quickly, and, in turn, quickly feed back into a new period of equity growth and lower inflation. Plus, as Ben always reminds us, where there are problems, there are also opportunities.
All this and more in the latest episode of Onward, anywhere that you listen to podcasts.
