Harvard Prof., Fmr. IMF Economist Rogoff: SVB Collapse the ‘Inevitable’ Result of Stimulus from Monetary, Fiscal Policy

On Tuesday’s broadcast of CNN International’s “One World,” Harvard University Economics Professor and former International Monetary Fund Chief Economist Ken Rogoff stated that fallout like the collapse of Silicon Valley Bank (SVB) was the “inevitable” result of fiscal and monetary policy and that “You can’t run the system on so much booming credit and money and not have something like this happen.”

Rogoff said, “I think we had this giant experiment in fiscal and monetary policy that led to them having to raise interest rates. And it was inevitable that there’d be some fallout like this. You can’t run the system on so much booming credit and money and not have something like this happen. It doesn’t — it’s not the end of the world. There’s a balance between running your financial system so restrictively that they’re not loaning to innovative companies. Silicon Valley Bank came into being because some of the more heavily-regulated banks didn’t want to lend to these innovative startups. So, it was doing a lot of good, but there’s a balance. And there was definitely mismanagement and I think the regulators were asleep at the switch here. The Federal Reserve is supposed to oversee these banks, look at their books. It was big enough that they could’ve paid attention to this one and I don’t know what they were working on instead.”

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