101–110 of 889 posts
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Don't think it will work. Banks accounts are federally insured.
Here in Europe is's only 100k per account per holder. (Used to be 20K in NL)
If a bank does get in trouble, it's usually because its balance sheet is not sound (i.e., assets are not really worth more than liabilities). In the case of SVB, a big portion of its assets are loans made to startups. Who knows how many of those loans are at risk of default in this environment? Simultaneously, many of SVB's depositors are also startups that at the moment can't raise more capital and thus have been withdrawing money from their bank accounts to fund their cash burn. I suspect SVB can't sell its doubtful loans, or use them as collateral, so it has been forced to sell high-quality long-duration assets purchased when rates were much lower, recognizing large losses.
From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.
Every bank is screwed if everybody takes all their money out. And everybody already knows it.
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Yes, it does. Lying is wrong[1]. Therefore, it is bad to base your banking system on it. It's the typical thing where the costs to the system accrete over time and then cause a crisis: the elites are bailed out, the taxpayers eat it. There wouldn't need to be a reserve ratio. A dollar could, in theory, be lent out an infinite number of times, so long as that dollar were lent (and saved) at increasingly shorter durati…
If you think fractional reserve banking is “lying” how are you okay with fiat money at all? If you were consistent you’d be a true goldbug.
That makes them real enough.
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Who would deposit their money in a bank that wouldn't let them get it back for years?
I own a few CDs. They’re not an unusual financial product.
A bank that only offers CDs or other long-duration deposits would be pretty weird.
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Who would deposit their money in a bank that wouldn't let them get it back for years?
I own a few CDs. They’re not an unusual financial product.
And most banks probably have much more money deposited in checking and savings accounts than in CDs.
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Perhaps I'm overly skeptical, but everyone should know that all banks have the risk of 'if everyone takes their money out, the bank won't be able to make it work', right?
Sure, and everyone knows that their favourite person in the world could just run them over in a car and kill them in seconds, but if your best friend says to you, “you know, I could drive my car into you and you would die… your life could be snuffed out with a moments notice” you may start to question your friendship.
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I assume you are trolling, but in case you are not. How would you provide loans to help get businesses started? How would you provide loans to people to buy their first homes? How would you provide loans so people can afford to go to school? How would you provide loans to buy a vehicle so people can get to/from their job before they get a paycheck? How would farmers afford to buy land, equipment and plant crops befor…
Savings. Frugality. Only consuming what we can actually afford. Investment with real skin in the game. If you have to take on much higher risk to get returns we will find ourselves being more careful about those returns actually happening.
Those savings are gonna grow at a pretty slow rate if you can't lend with interest.
Earlier quoted context omitted.
Yes, it does. Lying is wrong[1]. Therefore, it is bad to base your banking system on it. It's the typical thing where the costs to the system accrete over time and then cause a crisis: the elites are bailed out, the taxpayers eat it. There wouldn't need to be a reserve ratio. A dollar could, in theory, be lent out an infinite number of times, so long as that dollar were lent (and saved) at increasingly shorter durati…
If you think fractional reserve banking is “lying” how are you okay with fiat money at all? If you were consistent you’d be a true goldbug.
I do think you should be able to trade fiat into gold and vice versa tax free, so gold can be used for savings, which it is very good at.
In fairness, nobody agrees with me on this stuff, including myself at times!