Consider banks, a confounding inversion of logic for most consumers.
Every time a bank takes in a deposit, they try to loan that money out as quickly as possible to put it to work making income for the bank.
If no one is applying for loans, the bank invests the money in bonds to earn a little interest.
U.S. Treasury Bills were paying a few points interest-historically low rates given the low inflation of recent years-but more than no income for the banks.
The problem is that interest rates have risen so fast that the banks are "Under water" on the bonds-which can only be sold at a loss since similar-term bonds are now paying higher interest.
The Federal Deposit Insurance Corporation provides "Insurance" to cover deposits of up to $250,000 when a bank cannot meet customer withdrawals.
Once again, the government comes to the rescue! Joe Biden announced that the government and the Fed will cover all the deposits at the "Failed" banks above the FDIC limit.
https://amgreatness.com/2023/03/18/connecting-dots-covid-to-svb-and-beyond/
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