3 ms·
Addressing systemic risks that individual actors aren’t well incentivized to handle is part of what governments and taxes are for. The $250k of FDIC insurance p
by AlchemistCamp 4y ago
Addressing systemic risks that individual actors aren’t well incentivized to handle is part of what governments and taxes are for. The $250k of FDIC insurance per bank customer exists because otherwise incentives drive bank runs even for banks with broad consumer bases.
Spending taxes on preventing financial meltdowns from cascading actually makes the government and its citizens wealthier than not doing so.
- JohnFen 4y agoBut we're talking about businesses here. They are certainly well-incentivized to properly handle the money in these amounts. The risk of losing it (and potentially the business) sounds like excellent incentive.
- AlchemistCamp 4y agoFrom my POV, they did "properly" handle their money by putting it in a large, trusted bank with a great reputation and focus on their type of business. What was your cash management strategy with your startup (assuming you have relevant experience)?