Silicon Valley Bank and the Design Deficiencies of the Debt-Based Growth Model

Breakthroughs Come From Breakdowns

~Stuart T Valentine

March 20, 2023

My take on the Silicon Valley Bank collapse is that on the one hand, I am grateful that we have a Federal Reserve Bank in the role of "lender of last resort," to step in when these breakdowns occur. On the other hand, it is precisely the source code of “money-as-debt” and the “debt-based growth model,” that the privately owned Federal Reserve system was designed for, that has created the conditions for this type of brittleness in our economy. It is a great model if your goal is to always maximize financial profits everywhere, but it falls short if the goal is to create long-term environmental health and social well-being. So....Were I the grand puppeteer, I would push hard for a re-thinking of this upside-down pyramid design we currently live with and advocate strongly for a more stable design akin to the Pyramid of Giza. Thankfully, this re-design job is currently well on the road through the Transforming Finance movement that Hazel Henderson and Ethical Markets Media kicked off in 2009, and yet we have many miles to go in coming up with the reforms that will demonstrate workable alternatives.

The positive view of the SVB meltdown is that breakdowns like this expose the design deficiencies of the debt-based growth model and serve to open the door to demonstrate viable, more "whole-system" alternatives. Notwithstanding the human faculty of foresight, radical re-design rarely comes from a place of complacency and comfort. The meltdown of SVB (15 years to the day of the failure of Bear Sterns Bank) is, therefore, an opening to push for economic models that better align human endeavors (AKA the economy) with a more biomimetic model that generates a balanced outcome for the whole ecosystem - not just the singular financial profit design objective we have inherited from a bygone era. While we are in the first inning of this economic transformation there are plenty of reasons for hope. Wall Street has already adopted the use of Environmental, Social, and Governance (ESG) analysis as a valid expansion of how we measure a company's performance, beyond the outdated single-bottom-line metric of financial profit. As we approach 8 billion people, the need of the times is to go further than ESG analysis and craft a more Biomimetic economic model that expressly rewards creative solutions that mitigate the risks of runaway climate change, regenerates natural capital, and fosters social well-being (history has shown time and again that huge wealth disparity does not lead to social harmony!).

I believe each one of us has an important role to play in this Transforming Finance process. Change of this magnitude can only come from Billions of bottom-up choices by individuals who seek a more humane and Biomimetic alignment with natural systems that govern life on Mother Earth. The institutions that currently govern economic incentives are universally operating on outdated software and it is times like these when we collectively have the opportunity to introduce a more life-supporting source code governing human activity. Let's make the most of it!