Ray Dalio

And since they each affect each other, it produces what I call the big cycle.

No, it was obvious.

Look, I want to talk about the mechanics, really.

I'm so eager to pass along an understanding of the mechanics so people themselves can do the analysis.

um so one man's debts or another man's assets um okay so what happened the government had to sell a lot of debt and when it sold a lot of debt there were a lot of entities that bought a lot of bonds government bonds

Um, and money was very easy, which meant that short-term interest rates were very low.

Um, and money was almost being, it was actually being given away because they had interest only loans and interest rates were less than 1% and you didn't have to pay back principal so you can go get money.

And so that created.

a lot of debt, and it created a lot of buying of government bonds.

So what happened to Silicon Valley Bank is what happened to many, many entities all around the world, not just banks.

What does a bank do?

A bank takes in deposits, typically, or debt in some way, and then it buys debt.

It can do that in the form of making a loan, or it could do that in the form of buying a government bond, buying debt.

And then when interest rates went up, the value of that debt went down,

The money they had to give to depositors became more and more expensive.

And also depositors, wanting them to be competitive, looked at money market rates or other rates and withdrew money from the bank because they had better uses.

Okay, so what did that leave them with?

It's a banking problem that has happened literally for thousands of years.

that what they do is the depositors want their money back and they're holding assets that are, in this case, have gone down in value.

You're allowed to be in the business.