4 ms·

How is this not wealth destruction? All shareholders just got reduced to either zero, no? Or at least they only can get something, with whatever remains after

• nerdponx 4y ago
  This is my thought as well. The deposits and shareholder value were destroyed, then only the deposits were un-destroyed. Seems like net decrease in money supply, which should be deflationary to some extent. I swear some people see "government" and just assume everything is a big porky wasteful spending bill implemented by clueless populists.
  • ETH_start 4y ago
    The depositors of these banks, me included through my exposure to USDC, should be the ones who pay the price for the bank's risky lending strategies, not the depositors of other banks. Otherwise there is no reason for depositors to do due diligence, and we get a less effectively managed economy as a result. Consumers do much, if not most, of the management of industry, but that's only if consumers are fully exposed to the costs incurred by their choices. It's because consumers bear the costs in cosmetic procedures that such procedures are getting cheaper while healthcare gets more expensive: https://www.ncpathinktank.org/pdfs/st349.pdf https://www.ncpathinktank.org/pdfs/st349.pdf
    • brewdad 4y ago
      99% of customers don’t have the financial knowledge to do due diligence on their bank. Just look at the thousands of comments posted today on these various threads for proof. For the average customer, due diligence should begin and end with “is my bank FDIC insured?”
      • ETH_start 4y ago
        You don't need specialized knowledge. You just need to have the motivation to seek out sources that aggregate and distill knowledge. When people buy TVs, cars, fridges or shop for a laser eye surgery procedure, they seek out credible third party assessors, in the form of Wikipedia articles, Consumer Report magazines, end user ratings, etc to inform their decisions. The collective intelligence of the consumer market will also increase as more people participate as price and quality conscious consumers.
      • anon291 4y ago
        99 percent of consumers have bank balances below 250k
        • nerdponx 4y ago
          Many businesses need more than $250k in cash to cover payroll, many of which are not large sophisticated institutions that have the expertise to look into the risk management practices of any bank they might be interested in.
          • anon291 4y ago
            Businesses do not have rights to exist or engage in commerce independent of the individuals which constitute them. That is to say, if business X did not do risk management because it is small and unsophisticated, it is okay to let business X wind down, whereas it is not okay to let a human go hungry because they are unsophisticated. Humans have rights, Businesses do not. I'm as conservative as they come (look at my post history), and I am flabbergasted by people from both sides of the aisle who honestly, truly believe businesses have a right to exist, including welfare for when they are unable to. When it comes to human life, given by God, we are obligated to spend almost any amount that we can in order to preserve that life. When it comes to business existence, we are not. By all means, welfare programs should immediately be expanded to help the individuals affected (including the business owner) to not go hungry, or be without medical care. By no means should the business continue to operate via welfare magic. Hopefully, for the business owner, the individual welfare availability will give him/her some time to get back on their feet and potentially start the business again with new capital if needed. But the source of that capital is not a concern of the government. That's for the private market.