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It's real plank-in-your-own-eye stuff that all the crypto-huggers will dismiss the BLS analysis so readily at the line about banks acting as a risk buffer. Yes,

It's real plank-in-your-own-eye stuff that all the crypto-huggers will dismiss the BLS analysis so readily at the line about banks acting as a risk buffer. Yes, to be sure! Banks present risks, massive risks, risks which should have been and still should be much better managed, at both bank and government levels — but boy howdy, are you in for a treat, you should see what happened to a financial system in the bad old days, when there were banks but no deposit insurance, and there would sometimes be a run on the banks, and they lose all their customers' cash, and the shock waves ripple through the whole economy. Now let's do the exact same thing in the crypto-verse, except with even dodgier loans, even more pathetic capital buffers, and, by the way, rampant fraud and bank robberies. It is only by the grace of obscurity and irrelevance to anything that matters that crypto-finance as a whole doesn't suffer widespread derision and fear a hundred times worse than the banking crisis.

NicoJuicy 5y ago
Crypto: Capital buffers? What's that. We didn't see it in our due diligence list. Here is a summary of that list:
- cblconfederate 5y ago
  i mean yeah, that is one of the reasons why people are into crypto
nickff 5y ago
>"you should see what happened to a financial system in the bad old days, when there were banks but no deposit insurance, and there would sometimes be a run on the banks, and they lose all their customers' cash, and the shock waves ripple through the whole economy." It is my understanding that there was never a run on a solvent bank; runs were the consequences of bank failures, not the causes of them. It should also be pointed out that most bank failures were clearly caused by so-called 'unit banking', where the government prohibited banks from having multiple branches in diverse areas. Less-regulated banks (such as those in Canada and Scotland) suffered fewer failures, and had no issues with runs.
- fennecfoxen 5y ago
  Historical bank runs were associated with a variety of causes; while some were caused mostly by bank failure due to asset shocks, others (e.g. the panics of 1893 and of 1933) were clearly marked by contagion, and even healthy banks were ruined by runs. https://eh.net/encyclopedia/banking-panics-in-the-us-1873-1933/ https://eh.net/encyclopedia/banking-panics-in-the-us-1873-19... (+ Postscript for original post: I typoed BIS as BLS because I'm used to the latter, oops)
  - deleted 5y ago
    [deleted]
austinheap 5y ago
> [...] crypto-huggers will dismiss the BLS analysis so readily at the line about banks acting as a risk buffer. [...] For the past decade we've found out -- annually -- that internationally regulated financial provider X/Y/Z is banking narco terrorists, or sheltering funds for politicians, or being the final off-ramp for ransomware. > Now let's do the exact same thing in the crypto-verse, except with even dodgier loans [...] Guess it depends on your definition of "dodgier". I grew up with unregulated pay-day-loans being in every strip mall in Ohio. > [...] rampant fraud and bank robberies. The IC3 report <https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3ElderFraudReport.pdf https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3ElderFrau...> on state-side fraud implies the per-capita rate of Americans scammed in 'normal banking' far exceeds the rate of Americans scammed by crypto.
- fennecfoxen 5y ago
  > For the past decade we've found out -- annually -- that internationally regulated financial provider X/Y/Z is banking narco terrorists, or sheltering funds for politicians, or being the final off-ramp for ransomware. A scandal, to be sure! You have, indeed, identified the mote of dust in your brothers' eye. But while it's certainly bigger in absolute terms, you should try it as a percentage of transaction volume. The only reason that crypto doesn't blow it totally out of the water on crime volume is that crypto remains obscure, only marginally relevant to the real world. It's like telling me that there's more crime total in the US than there is in Haiti. It's technically true — and yet, Haiti is much dangerous.
louloulou 5y ago
Nonsense. Free banking systems worked fin in Scotland and Canada on a gold standard, and would arguably work even better in an internet connected society. Central banks exist purely to give governments full control over money.

NicoJuicy 5y ago

Crypto: Capital buffers? What's that. We didn't see it in our due diligence list. Here is a summary of that list:

cblconfederate 5y ago
i mean yeah, that is one of the reasons why people are into crypto

nickff 5y ago

>"you should see what happened to a financial system in the bad old days, when there were banks but no deposit insurance, and there would sometimes be a run on the banks, and they lose all their customers' cash, and the shock waves ripple through the whole economy." It is my understanding that there was never a run on a solvent bank; runs were the consequences of bank failures, not the causes of them. It should also be pointed out that most bank failures were clearly caused by so-called 'unit banking', where the government prohibited banks from having multiple branches in diverse areas. Less-regulated banks (such as those in Canada and Scotland) suffered fewer failures, and had no issues with runs.

fennecfoxen 5y ago
Historical bank runs were associated with a variety of causes; while some were caused mostly by bank failure due to asset shocks, others (e.g. the panics of 1893 and of 1933) were clearly marked by contagion, and even healthy banks were ruined by runs. https://eh.net/encyclopedia/banking-panics-in-the-us-1873-1933/ https://eh.net/encyclopedia/banking-panics-in-the-us-1873-19... (+ Postscript for original post: I typoed BIS as BLS because I'm used to the latter, oops)
- deleted 5y ago
  [deleted]

austinheap 5y ago

> [...] crypto-huggers will dismiss the BLS analysis so readily at the line about banks acting as a risk buffer. [...] For the past decade we've found out -- annually -- that internationally regulated financial provider X/Y/Z is banking narco terrorists, or sheltering funds for politicians, or being the final off-ramp for ransomware. > Now let's do the exact same thing in the crypto-verse, except with even dodgier loans [...] Guess it depends on your definition of "dodgier". I grew up with unregulated pay-day-loans being in every strip mall in Ohio. > [...] rampant fraud and bank robberies. The IC3 report <https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3ElderFraudReport.pdf https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3ElderFrau...> on state-side fraud implies the per-capita rate of Americans scammed in 'normal banking' far exceeds the rate of Americans scammed by crypto.

fennecfoxen 5y ago
> For the past decade we've found out -- annually -- that internationally regulated financial provider X/Y/Z is banking narco terrorists, or sheltering funds for politicians, or being the final off-ramp for ransomware. A scandal, to be sure! You have, indeed, identified the mote of dust in your brothers' eye. But while it's certainly bigger in absolute terms, you should try it as a percentage of transaction volume. The only reason that crypto doesn't blow it totally out of the water on crime volume is that crypto remains obscure, only marginally relevant to the real world. It's like telling me that there's more crime total in the US than there is in Haiti. It's technically true — and yet, Haiti is much dangerous.

louloulou 5y ago

Nonsense. Free banking systems worked fin in Scotland and Canada on a gold standard, and would arguably work even better in an internet connected society. Central banks exist purely to give governments full control over money.