341–350 of 889 posts
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This destroys the entire economy, making startups and corporations much harder to run to the point of impossibility. Even in countries run on Sharia law, they still find proxies for interest
Those proxies tend to make the risk and liability much much clearer than usury does. And generally speaking you can’t honestly use those proxies to build financial skyhooks
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curious what are these proxies? I thought under Sharia law charging interest is "illegal"
bank buys the house and you rent-to-own it. coincidentally the total amount of the rent is higher than what the bank bought it for. not "interest", but yea, pretty much interest
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These would be good questions to ask an undergraduate microeconomics professor. They have answers. It's not that nobody has ever thought about this before.
I know the answer; it's because being able to issue unlimited money, diluting the public's savings and salaries and then collecting interest on it benefits certain powerful people in a risk-free manner. That's not the answer which an economics professor would give me though. They are not trained to use their analysis skills so much as providing canned explanations. These economics professors have to pay their bills t…
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Every bank is screwed if everybody takes all their money out. And everybody already knows it.
Can't someone open a bank that takes money and just keeps it like a well-behaved child and doesn't secretly mess with it?
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This pre-supposes a pretty radical (yet normalized nowadays) economic philosophy: that growth per se is good. A more nuanced approach would be to value and triage lending opportunities according to how much they contribute to the heating up of the economy, and how much opportunity for future sustainability they provide.
I'll ask then. What happens to an organism when it stops growing? It's an exponential process and there are really only 2 states except for an infinitesimally small space between.
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Sell equity stakes or form a joint partnership. This is exactly how most startups get funding. Also, it’s not clear to me that credit has lifted people out of poverty; I’d argue that interest based lending has kept people in poverty, transferring wealth to those who already have it.
I dunno, people buying a house (and the mortgage that goes with it — their biggest loan of their life) is (to me) a good thing, rather that everyone a renter.
SVB is an institution that has supported a lot of businesses in tech. There are a lot of harmful clowns out there fearmongering. They should stop. The failure of a bank like this, if it occurs, would be bad for a lot of people.
We have been banking with SVB for the last 5 years. Not even once, they have done something for us.
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This destroys the entire economy, making startups and corporations much harder to run to the point of impossibility. Even in countries run on Sharia law, they still find proxies for interest
curious what are these proxies? I thought under Sharia law charging interest is "illegal"
Mudarabah is for companies that want loans, either startups or existing companies that want to expand. The not-a-loan is structured as a joint venture with profit and loss sharing, often with a new holding company. The bank becomes a part-owner of the holding company in a way that entitles the bank to collect profits on the joint venture up to a certain percentage of the original not-a-loan. Again, functionally identical to interest, but officially not.
It is worth noting that conservative Islamic clerics have raised objections over these, but have been overruled everywhere that money rules.
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Loans by modern banks rely on the issuance of new currency; it's a scheme which relies on diluting the value of citizens' existing currency. It's unethical; it's stealing from the many to enrich the few who will receive the credit once it's spent into the economy (going into friends' businesses). Kind of like how Carl Icahn sat on the Hertz board, made Hertz take out a huge loan, used the credit to award a huge contr…
This is so misguided. Just raising interest rates by a few points has resulted in many thousands of people losing their livelihoods in under a year, because companies could no longer justify taking out loans. What you're suggesting is eliminating loans altogether . This is a fun dorm room thought experiment, but it's not even hyperbolic to say that if it were actually pursued, it would result in a huge number of deat…
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Those government-mandated, ultra-safe capital reserves look like they're actually the big problem that's going to bring down banks right now. Banks have stuck a bunch of their reserves in really safe, predictable, high quality long-term bonds (particularly government issued ones). Because interest rates have gone up, those bonds are now worth substantially less than they were a year or so ago, meaning that the banks'…
respectfully, I'm not so sure. The decline in bonds applies to all fixed-rate securities. The only alternatives would have been just straight up cash (bad with inflation) or riskier, less-liquid assets (non-tradable loans with floating rates, for example). They are limited on the latter by risk weighting, and I'm not sure having looser risk controls on the asset side would really help confidence in the banking sector…