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Somehow, finance executives around the world apparently forgot how to manage risk in a rising interest rate environment. A banking crisis ensued. This is what the Fed wanted to happen The Federal Reserve’s plan to slow an inflationary economy is — suddenly — working. That’s how monetary policy often works. To lower consumer prices, bad things have to happen.
The rise in interest rates has been widely reported. We’ve all heard about it, right? The bigwigs at a few banks must have been out of town. The problem is if you buy the bonds and have to sell them — due to an unexpected crisis — as interest rates are quickly rising. You’re likely to lose money. And the banks lost money in front-loader bucketfuls.
Interest rates won’t rise too fast — we’ll be fine, the banks thought. I’ll retire on the massive gains we’ll see in crypto, some investors hope. Tulips are the best investment, said the purported 17th century speculator.