7 ms·
The odd part to me is that people forget how much you get for the measly 2% or so in fees you pay to a bank annually. You get FDIC insurance, protection against
by samnwa 9y ago
The odd part to me is that people forget how much you get for the measly 2% or so in fees you pay to a bank annually. You get FDIC insurance, protection against fraud, someone you can call for assistance, relative stability, ability to pay for things anywhere. With btc you get none of that, plus risk of losing your assets due to a user negligence, ignorance, hacks, sophisticated scams, or other culprits.
- xiphias 9y agoThe problem is that if you count monetary base and frqctional reserve inflation as well, that 2% can go up to 20% very easily.
- dmichulke 9y agoAssuming 2% inflation (and 0 fees and interest), you also get 81 ct purchasing power back on the dollar after 10 years. For some people that amounts to fraud.
- mistermann 9y agoYou also get the de facto obligation to bail them out when they get too wild.
- bunderbunder 9y agoThere's a fair bit to unpack there. It used to be that savings & loan type banking couldn't mix it up with serious financial engineering. Then the rules governing these things were broken down, and retail banks started taking on more and more fancy (and risky) investments. That's the kind of stuff that eventually led to the bailouts. But I don't think it can be stressed enough that "getting too wild" meant getting involved in a lot of capital markets that were traditionally firewalled off from savings & loan banking. Holding up what happened to the banks during the financial crisis as an argument for savings & loan banking being riskier than investing in the open market is a lot like telling people that, if they don't like the heat in the frying pan, they'd be a lot better off in the fire. (edit: totally mistyped in that last paragraph)
- Kadin 9y agoIf by "get too wild" you mean "achieve regulatory capture over the agencies and frameworks intended to prevent them from engaging in short-term profitable but long-term risky behaviors", then, sure. But you can swap out currencies and still have that exact same problem. In some Bitcoin-based parallel universe, you'd just have a different set of companies hiring the same lobbyists and cutting the same political contribution checks, in order to achieve the same sort of favorable regulation and risk shielding. This is the key problem that I think Bitcoin boosters fail to grasp: the government didn't bail out the banks because they're banks. The government bailed out the banks because they got themselves into a position where they could demand a bailout and get it. There's nothing about banking qua banking that allows this; you can do it (and historically it has happened) in other industries. Blockchains don't fix that, because it's not a technological problem. It's a political and sociological problem, not amenable to quick technical fixes.
- dsacco 9y ago> For some people that amounts to fraud. But it very clearly isn’t. That’s an egregious abuse of the word, “fraud” by any commonly accepted definition.
- dmichulke 9y agoSome sorts of fraud are legal if that's what you mean. Usually, when committed by the government. Examples: - Underfunded pension funds, - bank bailouts with taxpayer money, - wars with made-up reasons, The cost of each should be in the trillions but it's not fraud. By the same reasoning, previously one could expect to get a positive real interest rate (= nominal interest rate - inflation), yet that's not the case. Legally fraud? No. Challenging the economics of the last few milleniums? Yes.
- sedtrader 9y ago> bank bailouts with taxpayer money You do know the banks payed back the bailout money with interest and added fines right? Overall it was a net positive for tax payers. Not sure how that's a fraud... Your other examples are suspect as well...
- rdm70 9y agohttp://www.nj.com/news/index.ssf/2010/08/sec_finds_nj_acting_negligentl.html http://www.nj.com/news/index.ssf/2010/08/sec_finds_nj_acting...
- rhino369 9y ago1) There isn't anything misleading going on, so who is doing the defrauding? 2) You'd lose that value if you just kept it in a box. 3) You really shouldn't be keeping substantial amounts of money in bank for 10 years.
- garmaine 9y agoAh, except that capital equipment in your business you pay 2% interest to finance? The manufacturer sold it at a cost + profit margin that included the 2% fee they're paying on their equipment, payroll bridge loans, etc. So did their suppliers, which factors into the costs paid further upstream and passed on down. There could be many, many layers from resource extraction (mining) to consumer goods, making a multiplying effect. And what is GDP? The aggregation of all these transactions. So even if the bank only captured 2% from you, in aggregate the banking system sucks double-digit percentage of word GDP into their coffers for something that history has shown they don't actually do a good job of providing, in the absence of bail-outs. (And, fwiw, I don't know where you're getting 2% interest. Any real industrial financing would be much higher, with larger compounding effects.)
- ikeboy 9y agoWorld GDP is something like $100 trillion. Top thousand banks make something like $1 trillion (as per http://www.businessinsider.com/r-global-bank-profits-hit-920-billion-as-chinese-lenders-boom-2014-29 http://www.businessinsider.com/r-global-bank-profits-hit-920...). I think we can safely ignore the long tail here, as it consists solely of banks making under a billion. So, about 1% of global gdp is profit for banks.
- garmaine 9y agoThat $1 trillion number is retail banking only. It's a small factor in the scope of what I'm talking about.
- ikeboy 9y agoSo, mind showing me what firms are making multiples of that?
- wu-ikkyu 9y agoHow is profit defined? If a bank creates the money for a loan on a house, the loan defaults, and the house is foreclosed on, does that foreclosed asset count as a profit?
- PunchTornado 9y agoi don't need those services. thank you
- electic 9y agoYou really get nothing because the 2% doesn't make up for inflation. Heh, in fact you are probably losing money keeping it in a FDIC insured savings or checking account that pays interest.