4 ms·

in what sense? bail-in's don't burden public coffers and would target disdain at the 1 company that was overlevered, instead of politicians are you referring

• joeyrideout 7y ago
  In the sense that Main Street may end up paying for Wall Street's mistakes again. It happened in southern Europe already this decade. If bond market liquidity dries up, the average consumer's uninsured deposits will take a hit. People start to horde cash and the economy suffers.
  • fwip 7y ago
    Does the average consumer have uninsured deposits?
    • dmoy 7y ago
      If we're talking about bank deposits in the US, no. The median household has drastically less than 250k total
      • denimnerd42 7y ago
        it's 250k per account so.. no one should have uninsured deposits
        • Mirioron 7y ago
          But if the system collapses, what's the chance of actually getting the value of your money back?
          • JamesBarney 7y ago
            Pretty good. Its insured by an entity that can literally print money.
            • Mirioron 7y ago
              Yes, but if they print money then your $100k will be worth less than $100k. This is why I asked about value. People saved to buy an apartment towards the end of the Soviet Union. When the Soviet Union collapsed they could barely afford a car for the saved money.
              • cm2187 7y ago
                You don’t need for the financial system to collapse for inflation to eat into these deposits. Even target inflation (about 2%) eats these low yielding deposits over the long term. And the never ending increase of public debt will result in high inflation at one point. My point being that if you have $250k in savings, it probably shouldn’t sit and melt on a savings account.
              • JamesBarney 7y ago
                Usually a bank run will involve people hoardong money, and run away inflation is caused by people spending money as quickly as they get it.(is a rapid increase in money velocity and the other a rapid decrease). So these two forces should counteract each other.
            • A2017U1 7y ago
              The Venezuelan government can print money too. I really doubt people who get the the face value money back while the value of the money plummets are going to be fooled. How many people will like the price of petrol and iphones doubling overnight?
              • acct1771 7y ago
                All of the people that can already afford 15 each of those everyday items won't mind.
    • metanoia 7y ago
      On paper, no. We're all insured by the FDIC/NCUA up to $250k per institution (or account? I forget). In reality, I think the systemic risk means everyone has deposits on the line as the FDIC can't cover multiple bank failures.
      • JamesBarney 7y ago
        If there were multiple bank failures the treasury would loan the FDIC as much money as needed to cover it.
        • caprese 7y ago
          under what provision? pure discretion? has this ever been tested? in 2008-2010 the FDIC got on the phone and brokered sales of smaller banks to large banks, specifically because they needed to do their part to stave off disaster with their thin credit line. Congress didn't ask them to do this, they just got on the phone because they had live capitalization ratio data.