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What Happens When Your Bank Isn't a Bank and Your Money Disappears?

nytimes.com

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Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#41

Post by digital-cygnet »

genewitch wrote: post #34
ljsprague wrote: post #32

I keep my money in a bank bank and ~30% of it has disappeared in the last few years!

more than 50% since 2010 or 2012, iirc, but this only tells the official story. when a "99 cents!" bag of chips is now "$2.99 only!" and the price of fuel doesn't correlate to anything except oil company P&E charts... Just remember, The "$6 burger" was both making fun of the fact that restaurants charged $6 for a hamburger, as well as less than $6 for the entire meal (usually ~$4 al a carte). That food place ceased o…

I see this view a lot, but every time I look at the actual data it isn't borne out.

BLS official inflation: $100 in Jan 2010 had the purchasing power of $144.94 today. That works out to 2.6%/yr by my math. So that's the "official" number that we want to disprove

Gallon of gas: $2.77 in 2010, $3.20 in Jan 24. 15% increase, 1% annualized

Honda Civic [not doing Mustang because it's harder to find data and as a luxury vehicle the comparison isn't as clean]: $16,205 in 2010, 24,000 today. 50% increase, 2.8% annualized

Big Mac: $3.73 in 2010, $5.69 today. 52% increase, 3% annualized

I live in an HCOL area, and did in 2010, so both of these sets of numbers feel a little low to me, but they mostly match my experience. As far as I can tell inflation mostly matches what the government reports, with some sectors coming in under and theoretically balancing out those that come in over (the classics of education, medicine, and housing). Those sectors that are outpacing are a real problem! But I think the consumer goods shadow-inflation people complain about is not borne out by data.

CPI: https://www.bls.gov/data/inflation_calculator.htm?mf_ct_camp...

Gas prices: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=e...

Civic: https://www.kbb.com/honda/civic/2010/ (original MSRP in Pricing section) and same URL ending in 2024

Big Mac 2010: http://www.maxi-pedia.com/big+mac+index+2010

Big Mac 2024: https://www.statista.com/statistics/274326/big-mac-index-glo...

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#42

Post by snakeyjake »

bloppe wrote: post #33
snotrockets wrote: post #25

Earlier quoted context omitted.

There are very strong guarantees of that not to happen. Wealthfront and Betterment are tiny compared to others, but share the same field with the big players who have interest to not make people scared shitless. It is the fast and loose, innocent because proving guilt is an effort, fintech I am sacred of: crypto, binary options etc.

The whole point of Bitcoin was to not need banks. You can be responsible for your own money. You can use a secure hardware wallet (with backup seed in a secure vault) and not have to worry about FDIC insurance. But most people seem to prefer risking all their money with an unaccountable third party over these relatively easy security measures. So now we have uninsured crypto banks. I get how this happened but it's ki…

> The whole point of Bitcoin was to not need banks.

I don't know man the fact that 0.0000000000000001 quectoseconds after the first bitcoin was mined all of the techbros set up exchanges so they could cosplay as Gordon Gekko while rubbing their nipples and moaning "arbitraaaaaaaaage" kinda calls this into doubt.

Anyone who thinks the typical consumer has the ability to operate/secure/assure a bitcoin wallet to a level equivalent to or better than a bank is delusional: there are crypto founding fathers who have been burned.

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#43

Post by genewitch »

digital-cygnet wrote: post #41
genewitch wrote: post #34

Earlier quoted context omitted.

more than 50% since 2010 or 2012, iirc, but this only tells the official story. when a "99 cents!" bag of chips is now "$2.99 only!" and the price of fuel doesn't correlate to anything except oil company P&E charts... Just remember, The "$6 burger" was both making fun of the fact that restaurants charged $6 for a hamburger, as well as less than $6 for the entire meal (usually ~$4 al a carte). That food place ceased o…

I see this view a lot, but every time I look at the actual data it isn't borne out. BLS official inflation: $100 in Jan 2010 had the purchasing power of $144.94 today. That works out to 2.6%/yr by my math. So that's the "official" number that we want to disprove Gallon of gas: $2.77 in 2010, $3.20 in Jan 24. 15% increase, 1% annualized Honda Civic [not doing Mustang because it's harder to find data and as a luxury ve…

when i moved to louisiana in 2013 gas was McDonald's subsidizes their food with drinks; regardless, though, inflation (in last decade only) on McChicken is 199%, mcdouble 169%, medium fries 138%; taco bell: 5-layer 132%; popeye's mashed potatoes 134%. See? onion-picking the big mac as the basis makes inflation "look better"

My car insurance is double what it was in 2014. My electric bill is easily 60% more expensive than it was in 2014, i said that already. That's more than double the 2.6% BLS numbers.

we can go around all day, but citing the government for numbers about inflation seems counter-productive.

anyone else notice how few fireworks were going off prior to july 4th? or after? Is that normal?

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#44

Post by snotrockets »

snakeyjake wrote: post #42
bloppe wrote: post #33

Earlier quoted context omitted.

The whole point of Bitcoin was to not need banks. You can be responsible for your own money. You can use a secure hardware wallet (with backup seed in a secure vault) and not have to worry about FDIC insurance. But most people seem to prefer risking all their money with an unaccountable third party over these relatively easy security measures. So now we have uninsured crypto banks. I get how this happened but it's ki…

> The whole point of Bitcoin was to not need banks. I don't know man the fact that 0.0000000000000001 quectoseconds after the first bitcoin was mined all of the techbros set up exchanges so they could cosplay as Gordon Gekko while rubbing their nipples and moaning "arbitraaaaaaaaage" kinda calls this into doubt. Anyone who thinks the typical consumer has the ability to operate/secure/assure a bitcoin wallet to a leve…

To exercise great opsec, one would have to be a psychopath. Most folks aren't, hence at least in the US, banks aren't allowed to excuse themselves by customer's lack of opsec ("regulation E").

The effective monopoly that banks has gotten isn't free to them, even if they do try very hard to avoid paying the cost asked.

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#45

Post by FateOfNations »

I was reading through the Synapse bankruptcy court filings, and oh jeez, is this a mess:

> Synapse often used multiple Partner Banks to service different functions for the same Fintech Partner. In certain instances, end user deposits through a Fintech Partner were deposited in an account at one Partner Bank, while end user withdrawals through that same Fintech Partner were processed from a different account at a different Partner Bank. This business model makes it both essential and difficult to reconcile transactions and ensure end users receive access to the correct amount of funds due to each end user.

https://www.courtlistener.com/docket/68458190/synapse-financ...

This fintech product model, with multiple intermediaries and service providers between end users and the depository banks, is a house of cards. Is running your bank-like financial services product as an actual bank that hard? These technology companies seem to want all the upsides of being a bank, with none of the responsibilities.

From my perspective, the big gap is that these depository banks aren't maintaining the customer and transaction data for the beneficial owners of the money they have on deposit. They seem like they should be the ones ultimately responsible for safeguarding the customer's funds. In the middle of this, the Federal Reserve dropped this gem about KYC non-compliance for one of the banks involved, swearing that it has nothing to do with the Synapse bankruptcy.

https://www.federalreserve.gov/newsevents/pressreleases/enfo...

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#46

Post by digital-cygnet »

genewitch wrote: post #43
digital-cygnet wrote: post #41

Earlier quoted context omitted.

I see this view a lot, but every time I look at the actual data it isn't borne out. BLS official inflation: $100 in Jan 2010 had the purchasing power of $144.94 today. That works out to 2.6%/yr by my math. So that's the "official" number that we want to disprove Gallon of gas: $2.77 in 2010, $3.20 in Jan 24. 15% increase, 1% annualized Honda Civic [not doing Mustang because it's harder to find data and as a luxury ve…

when i moved to louisiana in 2013 gas was McDonald's subsidizes their food with drinks; regardless, though, inflation (in last decade only) on McChicken is 199%, mcdouble 169%, medium fries 138%; taco bell: 5-layer 132%; popeye's mashed potatoes 134%. See? onion-picking the big mac as the basis makes inflation "look better" My car insurance is double what it was in 2014. My electric bill is easily 60% more expensive…

I was going for sources that could be cited -- for instance, I could only find reliable data on the Big Mac because of the Economist's famous index thereof. If you have a good source for historical McDonald's prices I'd love to see it and compare.

Without having some data to compare I cannot differentiate between (1) you are correct, (2) you are misremembering, or (3) you've experienced the inflation you claim, but for particular reasons (eg, you got a nicer car, or, your area had an influx of high earners).

Also, a small nit: by my calculations 60% growth over 10 years is 4.8% annualized - outpacing CPI yes, but not more than double.

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#47

Post by hodgesrm »

gumby wrote: post #3

I'm considering using Mercury,* which is allegedly quite popular with startups. They do have all the usual KYC etc of a bank. Like the ones discussed in the article, Mercury also keeps customer funds in Evolve, among other banks (I guess they claim to spread your money around so you don't have more thank 250K in any one basket). So if I understand correctly, the problem is that I have no visibility to the back end, s…

My company uses Brex among others. They do nightly sweeps into a set of partner institutions on your behalf. In theory means you are covered for $250K * number of banks, but the scheme is pretty opaque. It's also untested by a real failure as far as I can tell. The best mitigation is to spread accounts across multiple institutions.

p.s., Brex works fine for day-to-day transactions like AR, AP, and Payroll. We've been quite happy with it, but these days you can't fully trust any financial institution.

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#49

Post by fragmede »

genewitch wrote: post #40
fragmede wrote: post #37

Earlier quoted context omitted.

That whole safety thing probably increases the price a lot. Like crumple zones and airbags. Also what's the zero to sixty and quarter mile on a 1985 Mustang compared to a Honda Civic from today? Also how long did it last between oil changes, how many MPG did it get, how much routine maintenance did it need; etc, etc. The 1985 Ford Mustang was an amazing feat of engineering - for its time. We're 40 years past that tho…

>Also how long did it last between oil changes, how many MPG did it get, how much routine maintenance did it need; etc, etc. 3000 miles unless synthetic then 5 or 6 (same as my 2012 lexus with a simlar sized engine), 17-18MPG (same as my lexus), and "if you have a wrench and a Haynes you're halfway done". hope this clears up some things. eta: the 0-60 i am not sure, i'm sure my car with a 4.6 liter is faster and isn'…

The 2024 Honda Civic gets 10,000 miles between oil changes, and 30+ mpg, with a 0-60 and quarter mile that's competitive with a 1985 Mustang. Plus a ton more safety features, and without weighing a ton more because of them; it's about the same weight as well.

Hope that clears up why cars are more expensive today.

Re: What Happens When Your Bank Isn't a Bank and Your Money Disappears?

#50

Post by imtringued »

jellicle wrote: post #6

In a properly regulated world, all of these clowns would be shut down today and some of them would go to jail. Instead we do no regulation, these "not-banks lying and claiming your money is safe" get to harm a lot of people, and the public further loses trust in everyone involved. To anyone reading this who has money in any business that claims not to be a bank but instead your money is super-safely stored in a real…

In a properly regulated world, everyone would have some sort of personal insurance for counterparty risk. You pay $x per year and the government never steps in.

FDIC is a moral hazard in my opinion. The only thing the government should do is let people with low incomes claim their money back in advance so that they can pay their bills.

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