Brownstone Institute
Where Is Occupy Silicon Valley?
From the Brownstone Institute
BY
Bank failures tend to come in waves, and we are experiencing at least a mini-wave now.
Banks fail for three basic reasons: 1. Credit transformation: deterioration in borrower creditworthiness, usually due to an adverse economic shock (e.g., a real estate bust). 2. Maturity transformation: borrowing short, lending long, and then getting hammered when interest rates rise. 3. Liquidity transformation combined with an exogenous liquidity shock, a la Diamond-Dybvig, where idiosyncratic depositor needs for cash lead to withdrawals that exceed liquid assets and therefore trigger fire sales of illiquid assets.
The two most notable failures of late–Silicon Valley Bank and Silvergate–are examples of 2 and 3 respectively.
In some respects, SVB is the most astounding. Not because a bank failed in the old-fashioned way, but because it was funded primarily by the deposits of supposed financial sophisticates–and because of the disgusting policy response of the Treasury and the Fed.
SVB took in oodles of cash, especially in the past couple of years. The cashcade was so immense that SVB could not find enough traditional banking business (loans) to soak it up, so they bought lots of Treasuries. And long duration Treasuries to boot.
And then Powell and the Fed applied the boot, jacking up rates. Bonds have cratered in the last year, and took SVB’s balance sheet with it.
Again, an old story. And hardly a harbinger of systemic risk–unless such reckless maturity mismatches are systemic.
SVB was the Banker to the Silicon Valley Stars, notably VCs and tech firms. These firms are the ones that deposited immense sums in exchange for a pittance of return. Case in point, Roku, put almost $500 million–yes, you read that right, 9 figures led with a 5–into SVB!!!
I mean: what the eff? Was the Treasurer a moron? For who other than a moron would hold that much in cash in a single institution? (Roku claims its devices “make your home a smarter.” Maybe they should have hired a smarter treasurer and CFO, or replaced them with one of its devices). Hell, why is a company holding that much in cash period?
A few of these alleged masters of the universe (like Palantir) saw the writing on the wall and yanked their deposits: deposits fell by a quarter on Friday alone, sealing the bank’s doom. Those who were slow to run howled to the high heavens over the weekend that if there was not a bailout there would be a holocaust in the tech sector.
Even though the systemic risk posed by SVB’s failure is nil (or if not, then every bank is systemically important), the Treasury Department and the Fed responded to these howls and guaranteed all the deposits–even though the FDIC’s formal deposit insurance limit is $250,000. You know, .05 percent of Roku’s deposit.
When evaluating this, one cannot ignore the reality that the Democratic Party is completely beholden to Silicon Valley. This is beyond scandalous.
Occupy Silicon Valley, anyone?
Treasury Secretary Janet Yellen insulted our intelligence by assuring us this is not a bailout. Well, it’s not a taxpayer bailout, strictly speaking, because the Treasury is not providing the backstop. Instead, it is being funded by a “special assessment” on solvent banks. Which are owned and funded by people who also pay taxes. And such an “assessment” is a tax in everything but name–because it is a contribution by private entities compelled by the government.
The policy implications of this are disastrous. The whole problem with such bailouts is moral hazard. What is to stop banks from engaging in such reckless behavior as SVB did if they can obtain seemingly unlimited funding from those who know that they will be bailed out if things go pear-shaped?
And the regulatory failure here demonstrates that bank regulation–despite the supposed “reforms” of Frankendodd–can’t even catch or constrain the oldest bet-the-bank strategy in the book. Free banking–no deposit insurance, no bailing out of depositors–couldn’t do worse, and would likely do better.
No, the failure of SVB is not the scandal here. The scandal is the political response to it. This reveals yet again how captured the government is. This time not by Wall Street, but by tech companies and oligarchs that are currently the primary source of Democratic political funding.
A couple of weeks ago the Silvergate story looked juicy, but SVB has put it in the shade. Silvergate also grew dramatically, but on the back of crypto rather than SV tech. It became the main banker for many crypto firms and entrepreneurs. The crypto meltdown did not affect Silvergate directly, but it did crush its depositors, the aforesaid crypto firms and entrepreneurs. They withdrew a lot of funding, and an old-fashioned liquidity mismatch did it in.
In traditional banks, deposit funding is “sticky.” Banks that rely on wholesale funding (“hot money”) are more vulnerable to runs. Silvergate’s funding was not traditional sticky deposit funding, nor was it hot money per se. It was money that was pretty cool as long as crypto was cool, and became hot once crypto melted down.
A run started, but the run was precipitated by a liquidity shock. Simple story, really.
Silvergate’s failure was not a scandal. SVB’s failure per se was not a scandal (except to the extent that our vaunted banking regulators failed to prevent the most prosaic type of failure).
Again–the scandal is the politically tainted response that will have baleful consequences in the future, as the response virtually guarantees that there will be more SVBs in the future.
Brownstone Institute
Zuckerberg openly admits the US government’s involvement in aggressive violation of the First Amendment
From the Brownstone Institute
By
Benjamin Franklin warned that those who would surrender essential liberty to purchase a little temporary safety deserve neither liberty nor safety
History will remember this era as the moment when America’s most sacred principles collided with unprecedented institutional power – and lost. The systematic dismantling of fundamental rights didn’t happen through military force or executive decree, but through the quiet cooperation of tech platforms, media gatekeepers, and government agencies, all claiming to protect us from “misinformation.”
Meta’s sudden dismantling of its fact-checking program – announced by Zuckerberg as a “cultural tipping point towards prioritizing speech” – reads like a quiet footnote to what history may record as one of the most staggering violations of fundamental rights in recent memory. After eight years of increasingly aggressive content moderation, including nearly 100 fact-checking organizations operating in over 60 languages, Meta is now pivoting to a community-driven system similar to X’s model.
In his announcement, Zuckerberg first suggests that the censorship was purely a technical mistake, and then changes his tune near the end and admits what has long been litigated: “The only way that we can push back on this global trend is with the support of the US government. And that’s why it’s been so difficult over the past 4 years when even the US government has pushed for censorship. By going after us and other American companies, it has emboldened other governments to go even further.”
In many court cases costing millions, involving vast FOIA requests, depositions, and discoveries, the truth of this has been documented in 100,000 pages of evidence. The Murthy v. Missouri case alone uncovered substantial communications through FOIA and depositions, revealing the depth of government coordination with social media platforms. The Supreme Court considered it all but several justices simply could not comprehend the substance and scale, and thus reversed a lower court injunction to stop it all. Now we have Zuckerberg openly admitting precisely what was in dispute: the US government’s involvement in aggressive violation of the First Amendment.
This should, at least, make it easier to find redress as the cases proceed. Still, it is frustrating. Tens of millions have been spent to prove what he could have admitted years ago. But back then, the censors were still in charge, and Facebook was guarding its relationship with the powers that be.
The timing of the shift is telling: a Trump ally joining the board, Meta’s president of global affairs being replaced by a prominent Republican, and a new administration preparing to take control. But while Zuckerberg frames this as a return to free speech principles, the damage of their experiment in mass censorship can’t be undone with a simple policy change.
The irony runs deep: private companies claiming independence while acting as extensions of state power. Consider our own experience: posting Mussolini’s definition of fascism as “the merger of state and corporate power” – only to have Meta remove it as “misinformation.” This wasn’t just censorship; it was meta-censorship – silencing discussion about the very mechanisms of control being deployed.
While tech platforms maintained the facade of private enterprise, their synchronized actions with government agencies revealed a more troubling reality: the emergence of exactly the kind of state-corporate fusion they were trying to prevent us from discussing.
As we’ve covered before, we didn’t just cross lines – we crossed sacred Rubicons created after humanity’s darkest chapters. The First Amendment, born from revolution against tyranny, and the Nuremberg Code, established after World War II’s horrors, were meant to be unbreakable guardians of human rights. Both were systematically dismantled in the name of “safety.” The same tactics of misinformation, fear, and government overreach that our ancestors warned against were deployed with frightening efficiency.
This systematic dismantling left no topic untouched: from discussions of vaccine effects to debates about virus origins to questions about mandate policies. Scientific discourse was replaced with approved narratives. Medical researchers couldn’t share findings that diverged from institutional positions, as seen in the removal of credible discussions of Covid-19 data and policy. Even personal experiences were labeled “misinformation” if they didn’t align with official messaging – a pattern that reached absurd heights when even discussing the nature of censorship itself became grounds for censorship.
The damage rippled through every layer of society. At the individual level, careers were destroyed and professional licenses revoked simply for sharing genuine experiences. Scientists and doctors who questioned prevailing narratives found themselves professionally ostracized. Many were made to feel isolated or irrational for trusting their own eyes and experiences when platforms labeled their firsthand accounts as “misinformation.”
The destruction of family bonds may prove even more lasting. Holiday tables emptied. Grandparents missed irreplaceable moments with grandchildren. Siblings who had been close for decades stopped speaking. Years of family connections shattered not over disagreements about facts, but over the very right to discuss them.
Perhaps most insidious was the community-level damage. Local groups splintered. Neighbors turned against neighbors. Small businesses faced blacklisting. Churches divided. School board meetings devolved into battlegrounds. The social fabric that enables civil society began unraveling – not because people held different views, but because the very possibility of dialogue was deemed dangerous.
The censors won. They showed that with enough institutional power, they could break apart the social fabric that makes free discourse possible. Now that this infrastructure for suppression exists, it stands ready to be deployed again for whatever cause seems urgent enough. The absence of a public reckoning sends a chilling message: there is no line that cannot be crossed, no principle that cannot be ignored.
True reconciliation demands more than Meta’s casual policy reversal. We need a full, transparent investigation documenting every instance of censorship – from suppressed vaccine injury reports to blocked scientific debates about virus origins to silenced voices questioning mandate policies. This isn’t about vindication – it’s about creating an unassailable public record ensuring these tactics can never be deployed again.
Our Constitution’s First Amendment wasn’t a suggestion – it was a sacred covenant written in the blood of those who fought tyranny. Its principles aren’t outdated relics but vital protections against the very overreach we just witnessed. When institutions treat these foundational rights as flexible guidelines rather than inviolable boundaries, the damage ripples far beyond any single platform or policy.
Like many in our circles, we witnessed this firsthand. But personal vindication isn’t the goal. Every voice silenced, every debate suppressed, every relationship fractured in service of “approved narratives” represents a tear in our social fabric that makes us all poorer. Without a full accounting and concrete safeguards against future overreach, we’re leaving future generations vulnerable to the same autocratic impulses wearing different masks.
The question isn’t whether we can restore what was lost – we can’t. The question is whether we’ll finally recognize these rights as truly inviolable, or continue treating them as inconvenient obstacles to be swept aside whenever fear and urgency demand it. Benjamin Franklin warned that those who would surrender essential liberty to purchase a little temporary safety deserve neither liberty nor safety. Our answer to this challenge will determine whether we leave our children a society that defends essential liberties or one that casually discards them in the name of safety.
Here is the full transcript of Mark Zuckerberg’s announcement, January 7, 2024:
Hey, everyone. I wanna talk about something important today because it’s time to get back to our roots around free expression on Facebook and Instagram. I started building social media to give people a voice. I gave a speech at Georgetown 5 years ago about the importance of protecting free expression, and I still believe this today. But a lot has happened over the last several years.
There’s been widespread debate about potential harms from online content, governments and legacy media have pushed to censor more and more. A lot of this is clearly political, but there’s also a lot of legitimately bad stuff out there. Drugs, terrorism, child exploitation. These are things that we take very seriously and I wanna make sure that we handle responsibly. So we built a lot of complex systems to moderate content, but the problem with complex systems is they make mistakes.
Even if they accidentally censor just 1% of posts, that’s millions of people. And we’ve reached a point where it’s just too many mistakes and too much censorship. The recent elections also feel like a cultural tipping point towards once again prioritizing speech. So we’re gonna get back to our roots and focus on reducing mistakes, simplifying our policies, and restoring free expression on our platforms. More specifically, here’s what we’re gonna do.
First, we’re gonna get rid of fact-checkers and replace them with community notes similar to X starting in the US. After Trump first got elected in 2016, the legacy media wrote nonstop about how misinformation was a threat to democracy. We tried in good faith to address those concerns without becoming the arbiters of truth, but the fact-checkers have just been too politically biased and have destroyed more trust than they’ve created, especially in the US. So over the next couple of months, we’re gonna phase in a more comprehensive community note system. Second, we’re gonna simplify our content policies and get rid of a bunch of restrictions on topics like immigration and gender that are just out of touch with mainstream discourse.
What started as a movement to be more inclusive has increasingly been used to shut down opinions and shut out people with different ideas, and it’s gone too far. So I wanna make sure that people can share their beliefs and experiences on our platforms. Third, we’re changing how we enforce our policies to reduce the mistakes that account for the vast majority of censorship on our platforms. We used to have filters that scanned for any policy violation. Now we’re gonna focus those filters on tackling illegal and high severity violations.
And for lower severity violations, we’re going to rely on someone reporting an issue before we take action. The problem is that the filters make mistakes and they take down a lot of content that they shouldn’t. So by dialing them back, we’re gonna dramatically reduce the amount of censorship on our platforms. We’re also going to tune our content filters to require much higher confidence before taking down content. The reality is that this is a trade-off.
It means we’re gonna catch less bad stuff, but we’ll also reduce the number of innocent people’s posts and accounts that we accidentally take down. Fourth, we’re bringing back civic content. For a while, the community asked to see less politics because it was making people stressed. So we stopped recommending these posts, but it feels like we’re in a new era now and we’re starting to get feedback that people want to see this content again. So we’re gonna start phasing this back into Facebook, Instagram and Threads while working to keep the communities friendly and positive.
Fifth, we’re gonna move our trust and safety and content moderation teams out of California and our US-based content review is going to be based in Texas. As we work to promote free expression, I think that will help us build trust to do this work in places where there is less concern about the bias of our teams. Finally, we’re gonna work with President Trump to push back on governments around the world that are going after American companies and pushing to censor more. The US has the strongest constitutional protections for free expression in the world. Europe has an ever increasing number of laws institutionalizing censorship and making it difficult to build anything innovative there.
Latin American countries have secret courts that can order companies to quietly take things down. China has censored our apps from even working in the country. The only way that we can push back on this global trend is with the support of the US government. And that’s why it’s been so difficult over the past 4 years when even the US government has pushed for censorship. By going after us and other American companies, it has emboldened other governments to go even further.
But now we have the opportunity to restore free expression, and I am excited to take it. It’ll take time to get this right. And these are complex systems. They’re never gonna be perfect. There’s also a lot of illegal stuff that we still need to work very hard to remove.
But the bottom line is that after years of having our content moderation work focused primarily on removing content, it is time to focus on reducing mistakes, simplifying our systems, and getting back to our roots about giving people voice. I’m looking forward to this next chapter. Stay good out there and more to come soon.”
Published under a Creative Commons Attribution 4.0 International License
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Brownstone Institute
The Trump Administration Must Bring Moderna to Heel
From the Brownstone Institute
Moderna’s European filing also revealed that the company withheld trial results demonstrating that children under 12 who received the vaccine were ten times more likely than those who received the placebo to suffer “serious side effects.”
Last week, independent journalist Alex Berenson reported that a preschool-aged child died of “cardio-respiratory arrest” after taking a dose of Moderna’s Covid mRNA vaccine during its clinical trials. Despite federal requirements to report all trial information, the company withheld the truth for years as it raked in billions from its Covid shots.
The extent of the cover-up remains unknown, but Moderna, headed by CEO Stéphane Bancel, disregarded federal law requiring companies to report “summary results information, including adverse event information, for specified clinical trials of drug products” to clinicaltrials.gov. The company, not the government, is responsible for posting all results, and failure to report the death of a child constitutes a clear breach of US law, which threatens civil action against any party that “falsifies, conceals, or covers up by any trick, scheme, or device a material fact.”
To this point, pharmaceutical companies have remained largely immune for their role in perpetrating globally-scaled deception resulting in thousands of vaccine injuries and billions in profits. They have enjoyed a liability shield courtesy of the PREP Act, which offers protections for injuries resulting from vaccines; that indemnity, however, does not extend to non-compliance with federal regulations, material misstatements or omissions of fact, or other offenses.
The death of the child only became known because of an obscure European report released last year, which revealed that Moderna has known about the death for over two years while it continues to advertize Covid shots to children as young as six months old.
Moderna’s European filing also revealed that the company withheld trial results demonstrating that children under 12 who received the vaccine were ten times more likely than those who received the placebo to suffer “serious side effects.” Without any evidence, Moderna claimed that the side effects, including the death of a child, were unrelated to the shots.
The incoming Trump administration offers a rare opportunity to hold pharmaceutical companies accountable and to investigate the depth of the cover-up.
The FDA is responsible for enforcing the reporting of vaccine trial results, but recent heads of the agency such as Scott Gottlieb and Robert Califf have been fanatical supporters of Big Pharma. Trump’s choice for FDA, Dr. Marty Makary, presents a stark contrast to his predecessors. Makary has criticized the US Government’s reluctance to acknowledge the role of natural immunity in preventing Covid infection, and he opposed the widespread vaccination of children. He testified to Congress, “In the U.S. we gave thousands of healthy kids myocarditis for no good reason, they were already immune. This was avoidable.”
President-elect Trump has tapped Robert F. Kennedy, Jr., perhaps the most well-known critic of the Covid vaccines, to lead the Department of Health and Human Services, which oversees the FDA. He has named Dr. Jay Bhattacharya, an author of the Great Barrington Declaration, as his choice to head the National Institutes of Health. Further, Senator Ron Johnson (R-WI) told Berenson that he plans to subpoena the FDA once Republicans become the majority party in the Senate this month.
President Trump’s first term was ultimately defined by his failure to fulfill his pledge to “drain the swamp.” A corrupt bureaucracy, personified in many ways by Dr. Anthony Fauci, aided and abetted by advisors like his son-in-law, Jared Kushner, hijacked the president’s agenda. Now, the Trump administration has an unlikely yet monumental opportunity for health reform, which can start on January 20 with an investigation into Moderna’s cover-up.
The Covid response doomed Trump 1.0. Whether one regards this as a monumental error, the betrayal of a president by his advisors, an event beyond the president’s control, or a deeper and more complex plot involving everything and everyone associated with the government, both in the US and around the world, there is no question of the scale of the calamity for the public. The shots are part of that, the capstone failure of a long line of foreshadowing with lockdowns and all that was associated with pre-pharmaceutical interventions. The antidote came not as a cure but, for many, the disease itself.
There must be truth if not justice.
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