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Not exactly, because banks tell you that they will loan out your money and you might not get it back, that's why you get interest on the account. They can't go

Not exactly, because banks tell you that they will loan out your money and you might not get it back, that's why you get interest on the account. They can't go horse betting, but they can loan it out. You don't have "title" over the USD in the bank reserves. This is like if you put $100 in Chase's security deposit box, and they opened it up, took the cash, and lent it out, and then when you come to get it, they say, woops, we lost it all. That would be just straight up theft or fraud.

kwertyoowiyop 4y ago
In the USA, bank accounts are guaranteed by the government, up to $250K.
- tootie 4y ago
  And the FDIC can afford to do that because there are laws dictating liquidity requirements to banks and disclosure requirements to inspect and enforce those rules.
  - kwertyoowiyop 4y ago
    It’s almost as if our existing financial system, built upon the lessons from hundreds of years, is worthwhile! :-)
    - Veliladon 4y ago
      It's been funny to watch crypto basically speedrun the entire monetary system from Rai stones all the way to calls for central banking.
    - Animatronio 4y ago
      That's what makes it so boring, whereas DeFi is so exciting it gives you a heart attack seemingly every other day.
      - legutierr 4y ago
        What does DeFi have to do with any of what is happening with FTX?
    - imtringued 4y ago
      That doesn't stop people from thinking the Fed is the spawn of Satan.
      - kwertyoowiyop 4y ago
        What was that recent quote about cats thinking they are independent, but in fact are completely dependent on a system that they don't understand at all?
  - nostrebored 4y ago
    You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money out now, but nobody seems to care.
    - klodolph 4y ago
      I don’t know about others, but I suspect that if the FDIC ran out of money, congress would figure out a way to fund it even if it meant printing money. I am okay with this.
      - nostrebored 4y ago
        But liquidity is the issue here. In the event that this happens, how long would it be before you could have access to your funds?
        klodolph 4y ago
        Why do you say liquidity is the issue? It sounds like you are imagining some specific scenario here.
        imtringued 4y ago
        He means that the bureaucratic arm may take time to process your insurance claim, after all you aren't the only one waiting for your money.
        kwertyoowiyop 4y ago
        The answer seems to be “a few business days, usually next next business day” but that likely won’t appease the tinfoil hat crowd. https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html https://www.fdic.gov/consumers/consumer/news/cnfall14/miscon...
      - kasey_junk 4y ago
        You don’t need to guess. The FDIC is backstopped but the full faith & credit of the US government. There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depaccounts/confidence/symbol.html https://www.fdic.gov/consumers/assistance/protection/depacco...
- eftychis 4y ago
  Per institution. And there is a lot of consolidation. So I would be careful. It is really easy to be placing money into different banks, but essentially the same one.
  - achenatx 4y ago
    there are a variety of caveats, on your side it is per entity. If you are married it is 500K, if you have a trust it is like 1.25M. 250K for each beneficiary up to 5 (or something like that).
    - bluetwo 4y ago
      Actually this is not correct either. A married couple each have 250k coverage for their personal accounts, and each have 250k for shared account(s), so they could in theory have 1M coverage at a single institution. Other qualified relationships work similarly.
gfd 4y ago
Only tangentially related, but don't put cash in safety deposit boxes. Police can take them under civil forfeiture laws: https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m-cash-found-in-safe-deposit-store-raid/ https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m... https://www.businessinsider.com/fbi-raid-1400-boxes-us-private-vaults-ruling-2022-10 https://www.businessinsider.com/fbi-raid-1400-boxes-us-priva...
- cmeacham98 4y ago
  Civil asset forfeiture is one of those things that feels really unjust in the US, and I'm somewhat surprised there hasn't been a Supreme Court case ruling it unconstitutional per the 4th Amendment. I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?
  - deleted 4y ago
    [deleted]
  - HideousKojima 4y ago
    The only steelmanned argument for civil asset forfeiture goes back to its origins, when it was used to seize smuggled goods on ships. Since the ship's owner was almost always a wealthy person living in a different country making them almost impossible to go after, and the smuggled goods were missing tax stamps etc. making it clear that they were being illegally smuggled, the government would simply seize the goods. That's literally the origin of civil asset forfeiture in the US, and all of the horrible and unjustifiable examples of it that we see nowadays grew out of that much more limited and justifiable example.
    - tialaramex 4y ago
      Seems to me in the specific case of wealthy foreigner owns smuggled good a better (more just) arrangement accuses them not the goods, but with the mechanism that if they for some reason don't want to attend court (maybe because they're super guilty?) their goods are seized but the crime still exists. There are some nuances to work out to ensure cops can't accuse say Vladimir Putin of a crime involving the $8000 they found in your house, and then since Putin doesn't show up they keep your money, but the general idea seems more sound than civil forfeiture.
SilasX 4y ago
>Not exactly, because banks tell you that they will loan out your money and you might not get it back, that's why you get interest on the account. That's not right either. They promise you will get it back (the FDIC insurance), just that e.g. large amounts may have a delay. They are also scrutinized by regulators to ensure that the loans are sane enough not to all evaporate in value overnight, as a horse bet might.
derangedHorse 4y ago
As others have pointed out in comments on this post, banks typically don't loan out customer funds and instead use them as reserves. For loans, banks can create money out of thin air and just increase the number representing the borrower's bank account balance in a database somewhere. Interest is to incentivize adding more reserves to their balance sheets which in turn allows more loans (with considerably larger interest rates) to be given out

kwertyoowiyop 4y ago

In the USA, bank accounts are guaranteed by the government, up to $250K.

tootie 4y ago
And the FDIC can afford to do that because there are laws dictating liquidity requirements to banks and disclosure requirements to inspect and enforce those rules.
- kwertyoowiyop 4y ago
  It’s almost as if our existing financial system, built upon the lessons from hundreds of years, is worthwhile! :-)
  - Veliladon 4y ago
    It's been funny to watch crypto basically speedrun the entire monetary system from Rai stones all the way to calls for central banking.
  - Animatronio 4y ago
    That's what makes it so boring, whereas DeFi is so exciting it gives you a heart attack seemingly every other day.
    - legutierr 4y ago
      What does DeFi have to do with any of what is happening with FTX?
  - imtringued 4y ago
    That doesn't stop people from thinking the Fed is the spawn of Satan.
    - kwertyoowiyop 4y ago
      What was that recent quote about cats thinking they are independent, but in fact are completely dependent on a system that they don't understand at all?
- nostrebored 4y ago
  You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money out now, but nobody seems to care.
  - klodolph 4y ago
    I don’t know about others, but I suspect that if the FDIC ran out of money, congress would figure out a way to fund it even if it meant printing money. I am okay with this.
    - nostrebored 4y ago
      But liquidity is the issue here. In the event that this happens, how long would it be before you could have access to your funds?
      - klodolph 4y ago
        Why do you say liquidity is the issue? It sounds like you are imagining some specific scenario here.
        imtringued 4y ago
        He means that the bureaucratic arm may take time to process your insurance claim, after all you aren't the only one waiting for your money.
        kwertyoowiyop 4y ago
        The answer seems to be “a few business days, usually next next business day” but that likely won’t appease the tinfoil hat crowd. https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html https://www.fdic.gov/consumers/consumer/news/cnfall14/miscon...
    - kasey_junk 4y ago
      You don’t need to guess. The FDIC is backstopped but the full faith & credit of the US government. There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depaccounts/confidence/symbol.html https://www.fdic.gov/consumers/assistance/protection/depacco...
eftychis 4y ago
Per institution. And there is a lot of consolidation. So I would be careful. It is really easy to be placing money into different banks, but essentially the same one.
- achenatx 4y ago
  there are a variety of caveats, on your side it is per entity. If you are married it is 500K, if you have a trust it is like 1.25M. 250K for each beneficiary up to 5 (or something like that).
  - bluetwo 4y ago
    Actually this is not correct either. A married couple each have 250k coverage for their personal accounts, and each have 250k for shared account(s), so they could in theory have 1M coverage at a single institution. Other qualified relationships work similarly.

gfd 4y ago

Only tangentially related, but don't put cash in safety deposit boxes. Police can take them under civil forfeiture laws: https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m-cash-found-in-safe-deposit-store-raid/ https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m... https://www.businessinsider.com/fbi-raid-1400-boxes-us-private-vaults-ruling-2022-10 https://www.businessinsider.com/fbi-raid-1400-boxes-us-priva...

cmeacham98 4y ago
Civil asset forfeiture is one of those things that feels really unjust in the US, and I'm somewhat surprised there hasn't been a Supreme Court case ruling it unconstitutional per the 4th Amendment. I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?
- deleted 4y ago
  [deleted]
- HideousKojima 4y ago
  The only steelmanned argument for civil asset forfeiture goes back to its origins, when it was used to seize smuggled goods on ships. Since the ship's owner was almost always a wealthy person living in a different country making them almost impossible to go after, and the smuggled goods were missing tax stamps etc. making it clear that they were being illegally smuggled, the government would simply seize the goods. That's literally the origin of civil asset forfeiture in the US, and all of the horrible and unjustifiable examples of it that we see nowadays grew out of that much more limited and justifiable example.
  - tialaramex 4y ago
    Seems to me in the specific case of wealthy foreigner owns smuggled good a better (more just) arrangement accuses them not the goods, but with the mechanism that if they for some reason don't want to attend court (maybe because they're super guilty?) their goods are seized but the crime still exists. There are some nuances to work out to ensure cops can't accuse say Vladimir Putin of a crime involving the $8000 they found in your house, and then since Putin doesn't show up they keep your money, but the general idea seems more sound than civil forfeiture.

SilasX 4y ago

>Not exactly, because banks tell you that they will loan out your money and you might not get it back, that's why you get interest on the account. That's not right either. They promise you will get it back (the FDIC insurance), just that e.g. large amounts may have a delay. They are also scrutinized by regulators to ensure that the loans are sane enough not to all evaporate in value overnight, as a horse bet might.

derangedHorse 4y ago

As others have pointed out in comments on this post, banks typically don't loan out customer funds and instead use them as reserves. For loans, banks can create money out of thin air and just increase the number representing the borrower's bank account balance in a database somewhere. Interest is to incentivize adding more reserves to their balance sheets which in turn allows more loans (with considerably larger interest rates) to be given out