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Calling All Hackers: How money works (2024)

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Re: Calling All Hackers: How money works (2024)

#121

Post by danielmarkbruce »

eru wrote: post #115
danielmarkbruce wrote: post #109

Earlier quoted context omitted.

in retrospect i should have said "any entity who has GS as a counterparty will be saved"...

Not at all. Goldman Sachs had and has plenty of regular folks as counterparties for their credit cards (branded as Apple Cards, I think). These regular folks don't get bailed out. See also https://en.wikipedia.org/wiki/Archegos_Capital_Management which had Goldman Sachs as a counterparty and was not bailed out.

It was tongue in cheek. But, when someone says that, they generally mean a counterparty who owes money to GS, not the other way around. And I don't think goldies lost money on archegos.

Re: Calling All Hackers: How money works (2024)

#123

Post by cryptica »

I think overall, the idea of money is messed up on many levels. What we call 'money' today doesn't even have an identity. It's the most important thing in the world, it's also the most heavily utilized thing in the world but almost nobody knows what it means.

- It's backed by nothing.

- It's not a fair medium of exchange because it physically cannot circulate very far from 'money printers' (not many hops) before it's taxed down to nothing. This means that it's unevenly scarce based on social proximity; unfair by design. Cantillon effects on steroids.

- It doesn't even exist as a single cohesive concept; the US dollar in your bank account is not the same as the US dollar in your friend's bank account and it's not the same as the US dollar which European traders use to buy derivatives (e.g. Eurodollars)... There are literally thousands of different ledgers (banks, institutions, in different countries), each presenting its own interface supposedly showing their holdings of this mythical unit called 'The US dollar' which is actually thousands of different currencies, which happen to share the same name, scattered around the world and held together only by regulators whose only shared interest is to print more units for themselves than the next guy does. Slow and fallible human regulators represent the only layer of 'consensus' which exists for the entire fiat monetary system; they move at snails' pace in a world of high frequency trading.

Re: Calling All Hackers: How money works (2024)

#124

Post by rtsang1 »

takinola wrote: post #120
eru wrote: post #81

> In practice, buybacks can be used to create what is effectively a shareholder dividend in a more tax-advantaged way. Whereas with dividends, they are taxed as income, and this is realized immediately. With buybacks, they are taxed as capital gains, but crucially the gains are not realized until the asset is sold. This could be indefinitely far in the future, so it's more capital efficient. It has the added benefit…

Which jurisdictions tax unrealized capital gains? Asking for a friend so I can avoid passing through.

I don't know if this counts, but I believe Norway taxes unrealized gains (indirectly) via wealth tax. All stock value is on the chopping block come tax time.

I doubt this is a common thing. Whereas the other case (dividends tax credit) is far more common. It impacts those of us in Canada. Our government disincentivizes buybacks and encourages dividends instead. Typically, if you're in a low income bracket, and have investments brewing for decades (with high amounts of unrealized gain) in an unregistered account, it is preferable to get dividends over buybacks.

Re: Calling All Hackers: How money works (2024)

#125

Post by DavidPiper »

ggm wrote: post #46
DavidPiper wrote: post #40

Earlier quoted context omitted.

Just in case anyone is put off by this comment, I want to second the recommendation of Debt: The First 5000 Years. It's excellent, and it has as a free, chapter-by-chapter audiobook on YouTube. As for Graeber being controversial: yes, though I vaguely recall "The Dawn of Everything" being (moreso) the trove of interesting historical anthropological hypotheses, rather than "Debt"? Anyway, it's been a while, but my mai…

I totally agree. He writes well. I think the dawn of everything is a good read, and I will read debt, but without wanting to give in totally to 'appeal to authority' I think you have to recognise Graeber didn't win friends.

I think you'll enjoy it. My impression is he'd have won more friends with Debt than he did with the Dawn of Everything. Perhaps not literally, but I do remember thinking Debt made stronger cases on average, and was more philosophical than creatively-antagonistic in its weaker evidence parts.

Re: Calling All Hackers: How money works (2024)

#126

Post by em500 »

Imustaskforhelp wrote: post #36
mothballed wrote: post #29

Earlier quoted context omitted.

Narrow banking was denied a depositor account at the fed IIRC so it's basically DOA as they've envisioned it. IIRC the fed said that narrow banking threatens the stability of the banking system since private credit expansion (and ultimately, the risks that come with that) is in their estimation desirable. Regulators want nothing but to crush the idea.

> IIRC the fed said that narrow banking threatens the stability of the banking system since private credit expansion (and ultimately, the risks that come with that) is in their estimation desirable. Regulators want nothing but to crush the idea. But why? I don't understand, I feel like certain exceptions like (credit cards?) or house loans can be built or some personal loans but we all see a disaster which will be bi…

Here's John Cochrane take on Fed vs Narrow Banks: https://johnhcochrane.blogspot.com/2019/03/fed-vs-narrow-ban...

TLDR: Cochrane thinks the Fed wants keep a lid on narrow banking because it believes it can cross-subsidizing lending to households and businesses from retail deposits.

Re: Calling All Hackers: How money works (2024)

#127

Post by eru »

philipwhiuk wrote: post #114
eru wrote: post #101

Earlier quoted context omitted.

That's why you should bank with private counterparties, not the government. If you buy eg a gold ETF, you can ask all these questions without any guns coming out. You can also go and exchange them for physical gold whenever you feel like it. Without any guns coming out. If they break their promises, you can sue them. Without any guns coming out.

> If they break their promises, you can sue them. Without any guns coming out. Providing you and they are in a country who is prepared to use 'guns coming out' to enforce the outcome of said suing.

Private contracts are a lot more robustly enforced in most parts of the world than promises of the government.

You can also do jurisdiction shopping: many companies deliberately contract under eg London law instead of local law.

Re: Calling All Hackers: How money works (2024)

#128

Post by [deleted] »

user3939382 wrote: post #116
talentedcoin wrote: post #97

Earlier quoted context omitted.

What gets on my tits more is people who are pretty bright in one field (hacking) thinking that entitles them to just brute force their way through reasoning about some other field (finance) that in their arrogance they think is simpler.

It bothers me that finance people think they’re smarter than everyone when all their jargon bullshit boils down to SQL statements any senior DB person would understand.

[deleted]

Re: Calling All Hackers: How money works (2024)

#129

Post by Dylan16807 »

eru wrote: post #104
Dylan16807 wrote: post #98

Earlier quoted context omitted.

I guess. But you can fix the slow drain of inflation by using long-term treasury bonds instead of actual cash. That's pretty much a dollar and doesn't do badly.

Long-term treasury bonds are fairly volatile. That's how Silicon Valley Bank went under: their long-term bond holdings dropped in value enough to make them insolvent.

They can swing a few percent. So can gold. Either one could make a bank insolvent. In the long term treasury bonds are not volatile, especially if you hold them to maturity.

Re: Calling All Hackers: How money works (2024)

#130

Post by eru »

danielmarkbruce wrote: post #121
eru wrote: post #115

Earlier quoted context omitted.

Not at all. Goldman Sachs had and has plenty of regular folks as counterparties for their credit cards (branded as Apple Cards, I think). These regular folks don't get bailed out. See also https://en.wikipedia.org/wiki/Archegos_Capital_Management which had Goldman Sachs as a counterparty and was not bailed out.

It was tongue in cheek. But, when someone says that, they generally mean a counterparty who owes money to GS, not the other way around. And I don't think goldies lost money on archegos.

> But, when someone says that, they generally mean a counterparty who owes money to GS, not the other way around.

All the examples I brought up are about counter-parties owing money to GS.

> And I don't think goldies lost money on archegos.

At most trivial amounts, yes. Goldman got out of the position really quickly. But your earlier claim was a bit more universal than that.

Goldman ain't stupid: if there were a treasury 'put' on Goldman's counterparties (and Goldman knew that), then Goldman would exploit that and monetise that 'put'. Instead of getting out early as they did in real life, they would demand and get ridiculous compensation for staying in the position, and then enjoy the bail-out.

(Disclosure: I used to work for Goldman for a few years, but not as a proper banker. I liked the place, but I also think they are much less important than people think they are. And I suspect Goldman is partially playing into the perception, because being a villain is cooler than being a middling also-ran bank.

You might like the book 'What happened to Goldman Sachs'. They have never been the same since the IPO in the late 1990s.)

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