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You took the risk buying those bonds. Depositing cash at a bank is a different matter. No bailout for SVB; no bailout for you.

paxys 4y ago
Depositing >250K cash in a bank carries similar risk, so not a different matter at all.
- jacooper 4y ago
  If depositing money in a bank is risk, where should I put my money then?
  - paxys 4y ago
    Under your mattress. Protected by an armed guard. Split up among various banks. In treasury bonds. In the financial markets. In Bitcoin. Wherever you want. It's not the taxpayer's burden to insure >250k worth of your cash in one location.
  - the-grump 4y ago
    The big, big banks (Chase, BofA) are too big to fail and are also subject to more thorough stress tests. That's one option. You could also deposit in multiple banks to stay below 250k. There are institutions that automate that. Another option is to deal directly with the federal government and buy bonds from them (likely through a bank but your money doesn't have to stay there for long). Then only the most catastrophic scenario would see you losing money. You are still subject to inflation and interest rate risk. But honestly at that point, worry about having guns and knowing how to use them, not where your money is. One last edit to add that Treasury is making all depositors whole. So, really, all of this is moot... besides the guns :)
reducesuffering 4y ago
Depositing cash at a bank is not a different matter. You are giving another organization your money. Everyone knows that the government, FDIC, only insures up to $250k. That organization is then lending it out to make enough profits to employ thousands of people to give you, the depositor, all the services you've come to expect. Only charlatans are dumping $5m into a single bank with the thought, "no worries, if anything goes wrong the government will pay me my $5m." All of the interest SVB depositors were rewarded with was coming from MBS. Heads, I get extra interest, tails, government bails my deposit out.

paxys 4y ago

Depositing >250K cash in a bank carries similar risk, so not a different matter at all.

jacooper 4y ago
If depositing money in a bank is risk, where should I put my money then?
- paxys 4y ago
  Under your mattress. Protected by an armed guard. Split up among various banks. In treasury bonds. In the financial markets. In Bitcoin. Wherever you want. It's not the taxpayer's burden to insure >250k worth of your cash in one location.
- the-grump 4y ago
  The big, big banks (Chase, BofA) are too big to fail and are also subject to more thorough stress tests. That's one option. You could also deposit in multiple banks to stay below 250k. There are institutions that automate that. Another option is to deal directly with the federal government and buy bonds from them (likely through a bank but your money doesn't have to stay there for long). Then only the most catastrophic scenario would see you losing money. You are still subject to inflation and interest rate risk. But honestly at that point, worry about having guns and knowing how to use them, not where your money is. One last edit to add that Treasury is making all depositors whole. So, really, all of this is moot... besides the guns :)

reducesuffering 4y ago

Depositing cash at a bank is not a different matter. You are giving another organization your money. Everyone knows that the government, FDIC, only insures up to $250k. That organization is then lending it out to make enough profits to employ thousands of people to give you, the depositor, all the services you've come to expect. Only charlatans are dumping $5m into a single bank with the thought, "no worries, if anything goes wrong the government will pay me my $5m." All of the interest SVB depositors were rewarded with was coming from MBS. Heads, I get extra interest, tails, government bails my deposit out.