5 ms·
> Daily reminder that bank runs wouldn't be a thing if we did duration matching, forbidding banks from borrowing short and lending long. If we really want to p
by mrosett 4y ago
> Daily reminder that bank runs wouldn't be a thing if we did duration matching, forbidding banks from borrowing short and lending long.
If we really want to prevent bank runs, shouldn't we just forbid lending?
Snark aside, transforming duration is a big part of the value that banks add. In general, there's a lot of demand for lending short and borrowing long. Banks add value (and risk) by taking the opposite side of those trades. I'd rather have banks that suffer occasional runs (which really aren't that common at this point) than banks that don't transform duration
- uoaei 4y agoThis pre-supposes a pretty radical (yet normalized nowadays) economic philosophy: that growth per se is good. A more nuanced approach would be to value and triage lending opportunities according to how much they contribute to the heating up of the economy, and how much opportunity for future sustainability they provide.
- kurthr 4y agoI'll ask then. What happens to an organism when it stops growing? It's an exponential process and there are really only 2 states except for an infinitesimally small space between.
- Fomite 4y agoMost biological processes that apply to organisms aren't exponential, they're logistic. Which means when they stop growing, they're at steady state.
- uoaei 4y agoThe only "natural" organism that grows without attempting a quasi-stable, dynamic equilibrium with its environment is cancer. The exponential processes you refer to are not "natural" in the general sense and only represent the barest, simplest models.
- deleted 4y ago[deleted]
- ramesh31 4y agoWe had thousands of years of economic equillibrium. It was a pretty rough time.
- 3np 4y agoI don't know about you, but I didn't start dying at 20.
- umeshunni 4y agoYou did. It's just taking a long time.
- kragen 4y agoi'd probably be a lot healthier if i'd stopped growing about 20 years ago
- FactKnower69 4y agoGood thing we live in an environment with infinite carrying capacity and natural resources, I could see things getting pretty dicey otherwise
- chii 4y agoWith technological improvement, new exploration and the infinite span of the universe, i don't see why the carrying capacity isn't infinite.