After 48 hours of armchair doomsaying and grand predictions of the chaos to come, Silicon Valley’s nightmare was over. Yesterday evening, the Treasury Department managed to curtail the worst of the latest tech implosion: If you kept your money with the now-defunct Silicon Valley Bank, you would in fact be getting it back.

When the bank—a major lender to the world of venture capital, and a crucial resource for about half of American venture-backed start-ups—suddenly collapsed after a run on deposits late last week, the losses looked staggering. By Friday, more than $200 billion were in limbo—the second-largest bank failure in U.S. history. Start-ups who’d parked their money with SVB were suddenly unable to pay for basic expenses, and on Twitter, some founders described last-ditch efforts to meet payroll for the coming week. “If the government doesn’t step in, I think a whole generation of startups will be wiped off the planet,” Garry Tan, head of the start-up-incubation powerhouse Y Combinator, told NPR. The spin was ideological as well as economic: At stake, it seemed, was not only the ability of these companies to pay their employees, but the fate of the broader start-up economy—that supposedly vaunted engine of ideas, with all its promises of a better future.

Tech has now probably averted a mass start-up wipeout, but the debacle has exposed some of the industry’s fundamental precarity. It wasn’t so long ago that a job in Big Tech was among the most secure, lucrative, perk-filled options for ambitious young strivers. The past year has revealed instability, as tech giants have shed more than 100,000 jobs. But the bank collapse is applying pressure across all corners of the industry, suggesting that tech is far from being an indomitable force; very little about it feels as certain as it did even a few years ago. Silicon Valley may still see itself as the ultimate expression of American business, a factory of world-changing innovation, but in 2023, it just looks like a house of cards.

The promise of Silicon Valley was always that any start-up could become the next billion-dollar behemoth: Go west and stake your claim in the land of Google buses and delivery-app sushirritos! For start-up founders, the abundance of VC money created a frisson of possibility—the idea that millions in capital, particularly for seed rounds and early-stage companies, were within reach if you had a decent pitch deck.

But those lofty visions were apparently attainable only when money was easy. As the Federal Reserve hiked interest rates in an attempt to curb inflation, the rot crept down into the layers of the tech world. Once the job listings dried up and the dream of job security began to evaporate, even the basic infrastructure behind these companies—the services that enabled businesses to actually pay their employees—started to crumble too. The instability, it seems, extended further than we knew.

Silicon Valley itself is not over, nor has the venture money totally dried up, especially now that generative AI is having a moment. When product managers and engineers began leaving Big Tech en masse—maybe they were laid off; maybe the employees-only music festivals just started to get old—many, seeking new challenges, joined start-ups. Now the start-up world looks bleaker than ever.

It didn’t take much to bring down Silicon Valley Bank, and the speed of its demise was directly tied to the extent of its tech investments. The bank allied itself with this industry during an era of low interest rates—and although billing yourself as the start-up bank probably sounded like a great bet for much of the past decade-plus, it sounds decidedly less so in 2023. When clients got wind of issues with basic services at the bank, the result was a classic run on deposits; SVB didn’t have the capital on hand to meet demand.

The panic from venture capitalists around the bank’s fall reveals that there’s little recourse when these sorts of failures occur. Sam Altman, the CEO of OpenAI, proposed that investors just start sending out money, no questions asked. “Today is a good day to offer emergency cash to your startups that need it for payroll or whatever. no docs, no terms, just send money,” reads a tweet from midday Friday. Here was the head of the industry’s hottest company, rumored to have a $29 billion valuation, soberly proposing handouts as a way of preventing further contagion. Silicon Valley’s overlords were once so certain of their superiority and independence that some actually rallied behind a proposal to secede from the continental United States; is the message now that we’re all in this together?

Altman wasn’t the only one flailing around in search of a solution. Investor-influencers such as the hedge-fund honcho Bill Ackman, venture capitalist David Sacks, and entrepreneur Jason Calacanis spent the weekend breathlessly prophesying the end of the start-up world as we know it. Calacanis sent several tweets in all caps. “YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW,” went one. “STOP TELLING ME IM OVERREACTING,” read another.

The Treasury Department’s last-minute rescue plan will keep start-ups intact, but perhaps it will also keep tech from doing any real reflection on how exactly we got to this point. As part of a goofy critique of the weekend’s events, a couple of crypto-savvy digital artists are already offering a limited-edition NFT in memory of the year’s first full-blown banking crisis. (“Thank you!” it screams from above a portrait of President Joe Biden and Treasury Secretary Janet Yellen.)

Tech will continue its relentless churn, but the energy has changed; there’s no magic, no illusions about what’s going on behind the scenes. The conception of Silicon Valley as a world-conquering juggernaut—of ideas, of the American economy and political sphere—has never felt further off. It’s not to say that tech should be demonized, just that tech isn’t special. The Valley was always as capable of a bad bet as anyone else. If it wasn’t clear to tech workers by the end of last year, it sure is now.

Financial panics are nothing new. But the strange little panic we’re enduring—one that started last week with a massive bank run causing the collapse of Silicon Valley Bank (SVB) and that continued this morning with big sell-offs in the stocks of other regional banks—is arguably the first one in which social media, and particularly Twitter, has been a major player. And if the past few days are any indication, that does not bode well for the next major financial crisis.

Twitter has featured a useful flow of facts and analysis from informed observers and participants, on subjects including SVB’s balance sheet, the failures of bank regulation, and the pros and cons of bailing out depositors. But users have also been subjected to a flood of dubious rumors and hysterical predictions of new bank runs. Federal regulators worked assiduously over the weekend to come up with a plan that would forestall contagion and reassure depositors that their money was safe. But on Twitter, chaos loomed.

[Annie Lowrey: Silicon Valley Bank’s failure is now everyone’s problem]

The most notorious tweets of the past few days came from Silicon Valley venture capitalists, investors, and company executives, who were desperate for the government to guarantee that no SVB depositor would lose any money (even though most of SVB’s deposits were not FDIC-insured). Their rhetorical strategy of choice was to insist that unless SVB’s depositors were made immediately whole, the entire tech industry and every non-megabank in America would be at risk.

Specifically, they said we were facing a “Startup Extinction Event” that would set “innovation” back by 10 years or more. If the Federal Reserve and the FDIC made the wrong decision about SVB’s depositors, that could lead to “a bank run trillions of dollars in size.”

Jason Calacanis, an investor who spent much of the weekend tweeting red-alert messages in all caps, captured the general mood when he wrote, “YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW.”

Now, the Silicon Valley bros insisting that everything was going to hell may well have believed what they were tweeting (even if it seemed like a somewhat hyperbolic reaction to the failure of a middling bank). But they were also, as the saying goes, talking their book. Almost all of them had a clear financial interest in seeing SVB depositors — which included companies they were invested—in made whole by the government.

More to the point, by tweeting in such over-the-top language about the inevitability—not the possibility, but the inevitability—of massive bank runs across the country, they were, of course, making such bank runs more likely. Shouting “Fire!” in a crowded theater is not necessarily wrong if the theater is on fire. But encouraging panic is never the best strategy.

Predictions can become a self-fulfilling prophecy: Everyone who thinks that everyone else is going to pull their money out of the bank is going to try to get in the door first. These tweets also typically drew no distinction between wealthy depositors—who may well have uninsured deposits—and the majority of Americans, whose deposits are insured no matter which bank they have them in. That, too, contributed to the atmosphere of panic.

Still, the predictions of imminent doom weren’t the worst that social media had to offer this weekend. We also got a wild proliferation of rumors about the health not just of the banking system, but of specific banks. Unsurprisingly, many of the Twitter bios of the people spreading these kinds of rumors included the words Bitcoin or crypto.

[Read: Nancy Pelosi: ‘Follow the money’]

One high-profile, and especially egregious, example of this phenomenon came from Mike Alfred, who identifies himself as an “engaged value investor” and has almost 130,000 followers. Over the course of the day on Saturday, he tweeted out (and then deleted) a series of very specific claims about what was supposedly happening to First Republic Bank, headquartered in California, whose stock went through a massive sell off on Friday on concerns that it might go under as a result of contagion from SVB’s collapse. His proof for these claims, he tweeted, was “corroborating evidence from several good sources.” Well, okay then.

You might reasonably say that although none of this is ideal, the obvious answer is for people to be skeptical of what they read, particularly when it comes from sources they’re unsure of, and not to make decisions or leap to conclusions on the basis of random tweets. And that’s obviously correct in principle. But as we’ve seen with the persistence of false claims about the 2020 presidential election being stolen, and the continued ubiquity of false claims about the supposed deadliness of the COVID vaccines, social media is built, in some respects, to make it hard for people to be skeptical and patient. It’s a medium that is designed to encourage herding and trend-following—which, after all, are what makes things go viral—not independent thought.

This is especially true when it comes to something like a financial panic, the nature of which makes people more likely to act on fear and impulse. In that environment, false or just overheated claims, even if they seem improbable, can nonetheless have a powerful effect. They cast a kind of shadow that helps instill uncertainty and doubt. And that’s often enough to lead to bad outcomes, given that during panics, many of us act first and think later. Social media is now going to profoundly shape any financial crisis we go through. It doesn’t feel like we’re ready for it.

A financial panic like the one that struck several U.S. banks over the last few days presents a dilemma for the committed partisan. You don’t want to side with the failed Silicon Valley Bank and other collapsing institutions and come across as coddling the rich, but you also don’t want to root for the bank to fail and end up being a cheerleader for broader economic collapse. This is especially tricky for Republicans, who spent the weekend looking for a way to criticize President Joe Biden’s handling of the crisis, even as they waited to see what his handling of the crisis would be.

But a few prominent Republicans found a third way: Blame it all on wokeness.

“I mean, this bank, they’re so concerned with DEI and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission,” said Florida Governor and presumptive presidential candidate Ron DeSantis.

[Ronald Brownstein: The contradictions of Ron DeSantis]

“SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices,” tweeted Donald Trump Jr., presumably in contrast to the commonsense business practices that have led Trump family businesses to declare bankruptcy multiple times. “This won’t be the last failure of this nature so long as people are rewarded for pushing this bs.”

“We see now coming out they were one of the most woke banks in their quest for the [Environmental, Social, and Governance]-type policy and investing,” Representative James Comer of Kentucky, chair of the House Oversight Committee, said.

And Representative Marjorie Taylor Green offered a nonsensical statement, even by her standards, saying that “the fools running the bank were woke and almost became broke.”

This a clever maneuver, sidestepping messy questions about whether and how to rescue the failing banks by instead attaching the panic to an existing narrative about “wokeness” in the Democratic Party. It also avoids the risk of appearing to be against entrepreneurs who might lose their shirts in bank collapses, or against the financial system that has historically backed Republicans. The only flaw is that the line of attack makes no sense.

In reality, Silicon Valley Bank failed because it made some bad business bets. It invested deposits in long-term assets such as Treasury bonds. As the Federal Reserve raised interest rates, those investments lost value while simultaneously squeezing many of the depositors. The result was a bank run, complete with lines outside branches.

That’s unfortunate for SVB and for its customers (though the Treasury Department says it has a plan to make sure depositors don’t lose any funds, at no cost to taxpayers), but there isn’t an obvious role in this story for wokeness or DEI programs, and to the extent there might be one, DeSantis, Trump, and Comer aren’t explaining it. None of this is to say that SVB didn’t adopt some trappings of liberal identity politics; Trump Jr., for example, focused on a screenshot of an executive at SVB who touted her work on LGBTQ issues.

The reason that SVB would want to advertise its programs on DEI, ESG, and other matters is not because it was in thrall to woke ideology. It’s because that was a good business decision. Just look at the bank’s name: It caters to startups in a very liberal, highly diverse marketplace. Positioning itself as a socially conservative bank would have been a truly unwise business decision.

[David A. Graham: Mitch McConnell learns it isn’t personal–it’s strictly business]

But SVB was, at heart, a bank, and its goal was to make money. The bank didn’t fail because it was obsessed with diversity. It failed because it had done a poor job hedging its risks, and macroeconomic conditions turned perilous. A classical liberal would say this is a good thing; sometimes businesses fail.

DeSantis, however, is no classical liberal. He’s demonstrated that he is not only willing but eager to meddle in private companies’ business in order to enforce social policies, most prominently in his showdown with Disney. Although DeSantis is the most prominent example of this big-government tendency, he is not alone. As The Dispatch notes, Republican politicians have been on a crusade against ESG for months now, proposing some remarkably intrusive measures to force private companies to stop operating in ways that they think are good for business. Those companies might be wrong about the business effects, but traditionally, conservatives have left those decisions to businesses, for reasons of both ideology and political expediency.

The “wokeness” offensive fits comfortably into the new populist strain in the GOP. Despite the historical alliance between Republicans and the financial sector—forged out of a shared opposition to the stricter regulation Democrats traditionally favored—certain factions of American conservatism have long been suspicious of banks and big business, seeing them as leeching off virtuous Americans. The history stretches from Andrew Jackson’s assault on the Bank of the United States to William Jennings Bryan’s famous “Cross of Gold Speech” and on to the present day.

That makes it a ready line of attack for today’s new populists, and means that whether the SVB panic proves to be a passing episode or the start of a broader economic problem, the nation is likely to hear much more of the same for a long time to come.

Sheila Bair, a top banking regulator during the 2008 financial crisis, says the stunning implosion of Silicon Valley Bank is exactly why the Federal Reserve needs to halt its war on inflation.