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Calling All Hackers: How money works (2024)

phrack.org

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

#101

Post by eru »

msla wrote: post #20
staplers wrote: post #14

Earlier quoted context omitted.

There already are some gold pegged stablecoins Which require blind faith in reserve numbers.

Hey, so does gold-backed currency! How do you know how much gold the government is holding? Ask them! How do you know the government isn't lying? Ask this question loudly enough and meet people with guns!

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.

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

#102

Post by philipwhiuk »

hsbauauvhabzb wrote: post #69
nialv7 wrote: post #23

This smells a lot like a hacker thought because they are exceptional in one field (cybersecurity), they therefore are exceptional in all fields. The result is that information presented in this article is very surface-level, and quite biased.

Being exceptional in cybersecurity is a pretty good indicator that someone will be successful in other fields. A good cybersecurity person will understand that cybersecurity is a mix of technical mastery and the art of understanding human behaviour.

Let me guess - you work in cybersecurity?

This is XKCD #793 all over

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

#103

Post by LeanOnSheena »

danielmarkbruce wrote: post #94
LeanOnSheena wrote: post #60

Earlier quoted context omitted.

I didn't say it was an excuse. There is value in articles that correctly synthesize fundamental concepts in ways that bring in new learners who are curious and open to learning. There are things the author gets right, even if they are a bit facile.

You might be right. It's also possible you are wrong though. Some things have a lot of moving pieces and if one piece is off the entire thing is wrong - so you have to commit to getting a grounding that is quite thorough to have any understanding at all. I'd argue accounting is one such subject, finance is one, the legal system is one, software engineering is debatable, math isn't one.

I am a CPA by training originally, but have spent most of my time in operational finance roles for PE-backed technology companies. While my work is all finance and accounting related, I mostly work with SQL and Python day to day creating internal applications for things like ARR etc.

I agree completely on your "thorough grounding" comment. I spend a lot of time explaining to finance people how tools like python, SQL, AWS stuff can be leveraged in simple ways for analytical purposes, and I spend a lot of time explaining to technology people what all the finance and accounting stuff is really about. In both cases my experience is it always comes back to explaining fundamental ideas or concepts over and over, but applying them to different situations and contexts (I do so much more confidently when explaining accounting and finance stuff since I have deeper education & experience there).

A lot of times these fundamental ideas and concepts can be explained very simply and intuitively using toy examples. the problem is it can take years and years to build up enough experience to really separate the signal from the noise and see clearly what is truly fundamental (yes that's where formal education is helpful but it can be hard to really grok absent experience imo... In the same way learning a programming language can be easier if you just try to build something).

A deep understanding of fundamental concepts is what allows you to pick apart very complex and novel problems into it's component parts. A deep understanding of fundamental concepts is one of the things that separates professionals from non-professionals in my opinion.

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

#104

Post by eru »

Dylan16807 wrote: post #98
mothballed wrote: post #31

Earlier quoted context omitted.

On a long timescale gold is way more stable than the dollar. Dollar is nonvolatile on a long timescale in the sense the expected returns are negative and it does it reliably at usually anywhere from a return around negative 2-10%. But in terms of price stability gold would be far far far far more stable on anything but the most short-sighted of timescales.

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.

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

#105

Post by eru »

mothballed wrote: post #56
kaibee wrote: post #45

Earlier quoted context omitted.

> On a long timescale gold is way more stable than the dollar. This is a nonsense claim. How many flat screen TVs could you buy for a pound of gold over a 'long time scale'? Cancer treatments? Acres of land in midwest? Hours of a normal person's time? The fact of the matter is that you cannot actually store labor or time for later, so the amount of stuff you can get your gold is gonna vary wrt the broader economy. Ec…

Non-responsive paragraph. You've attacked what could interchangeably be dollar or gold asking what it might buy or store, failing to recognize I was measuring relative stability rather than absolute stability. The dollar has lost over 95% of its value since inception of the federal reserve (at which time dollars nature changed significantly) in 1913 against some imperfect measures of CPI. That gives you a 20x differe…

The US always had really weird and restrictive financial regulations. Right from when the country got started.

Look to Canada for a much stabler system that didn't have banking crisis all the time. See eg https://archive.is/v13TM

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

#107

Post by philipwhiuk »

Imustaskforhelp wrote: post #21
staplers wrote: post #14

Earlier quoted context omitted.

There already are some gold pegged stablecoins Which require blind faith in reserve numbers.

I wouldn't call it blind faith similar to how it isn't blind faith to get usd stable coins I think paxos and xaut have audits etc. from what I know/ I have heard. Although having more audits is always a neat idea but I was just proposing that there are ways to invest in things like gold and have things like liquid gold perhaps via stablecoin or some other means too basically allowing you to instantly sell gold and go…

> I think paxos and xaut have audits etc. from what I know/ I have heard.

Ah, yes, the almighty auditors.

Auditing proves you passed the audit. Nothing more, nothing less. The audit can be at any level that suits the person paying for the audit. In this case it's the company who has the vested interest in passing the audit.

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

#108

Post by eru »

CraigJPerry wrote: post #15
huijzer wrote: post #6

How money works? Well look into fractional reserve banking and do the math. If you’re a bank, you can just loan out 10-100 times what you have in assets and ask say 5% interest. Then 5*10 to 5*100 is your annual interest to the bank. That’s why the Bible and Quran are against usury.

> fractional reserve banking and do the math all models are wrong but some are still useful. This model isn’t useful at all since the fraction was legislated to be 0 years ago.

That's in the US. Canada for example never had any legal reserve requirements.

However legal limits aren't the only ones that apply. Canadian banks still keep more than zero reserves around.

The more useful limitation in economic terms and in legal terms is on the amount of capital banks need to hold. A capital cushion is what makes your deposits stable, not reserves.

If you have a big enough capital cushion, you can always go and liquidate some assets to get the reserves needed to satisfy withdrawal requests. Having some reserves on hand is just very convenient, so the customer doesn't have to wait.

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

#109

Post by danielmarkbruce »

eru wrote: post #82
danielmarkbruce wrote: post #80

Earlier quoted context omitted.

Any entity with a bunch of counterparties and large numbers who blows up will potentially be saved.

Alas, yes. One of the perils of giving the relevant authorities too much discretion.

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

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

#110

Post by qsera »

mothballed wrote: post #42
dghlsakjg wrote: post #37

Earlier quoted context omitted.

Extremely simplified: When I deposit a dollar, the bank records a $1 deposit liability. If the bank makes a $1 loan, it creates a new $1 deposit for the borrower. If that dollar is spent and redeposited, deposits increase even though the amount of base money has not. It looks like multiplication, but what’s really happening is that loans and deposits are expanding together on the balance sheet. The bank is not creati…

They don't create wealth out of nothing. They capture, and potentially create, wealth by offering financial services including lending. The differences between the positive interest paid to depositors and the loan interest, after covering risk and other costs, is the wealth they've captured/created for themselves. I don't think anyone is under the illusion that credit expansion itself creates wealth in the sense of m…

>They don't create wealth out of nothing.

Banks loans may not create wealth. But they promise its creation to the society. The value of the money that they lend out comes from that promise.

And the people who borrowed from the bank create wealth when they repay their loans. The responsibility of the bank is to track it and ensure that it is created. OR that the money lended out is not spent. Either one should happen when the loan is repayed, so the bank does not care which one.

If the banks does not do it (ensure repayment or collect collateral), then all the people who worked for the money loaned by the bank, got their work stolen.

In other words, when you take a loan from a bank, you are actually borrowing from the society.

So watch your banks very closely.

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