Joe Biden's ebbing economic tide

Just as a rising tide lifts all boats, so ebbing ones sink them closer to the rocks. Economies are the same. When they weaken and recede, everyone afloat on them — savers, wage earners, businesses, banks — gets closer to danger. A few boats, moored unwisely, are smashed to matchwood.

That is what we are watching now. Silicon Valley Bank, the first financial institution to capsize in the latest crisis, had moored itself to long-term Treasury bonds bought when interest rates were at record lows. These federal IOUs are considered safe assets, but they are not bulletproof.

When interest rates rise, fixed-rate paper offering low yields becomes deeply unattractive. Why buy or hold a bond paying only a fraction of what is available in the higher-interest-rate market?

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