5 ms·

>it's based entirely on consumer confidence Not typical consumers, right? Typical bank consumers have < $250k in their account, and thus there's no reason for

>it's based entirely on consumer confidence Not typical consumers, right? Typical bank consumers have < $250k in their account, and thus there's no reason for them to cause a run.

QuarterReptile 4y ago
I guess maybe if all the small customers pull out of index funds to flee to bitcoin? Not sure.
- gmane 4y ago
  How would they even do that? Bitcoin handles ~350k transactions per day. VTI (Vanguard's Total Stock Index), a large size fund is on average traded 3,670k per day. That's one fund. There is no reasonable way for small customers to pull out of index funds to bitcoin unless there is a fundamental change to how bitcoin operates.
  - sowbug 4y ago
    VTI (Vanguard's Total Stock Index), a large size fund is on average traded 3,670k per day. I doubt those VTI transactions are each of a single share, which is the only way the 3.67M number you cite would match VTI's trading history. But nobody's mind was ever changed about Bitcoin on an HN comment thread, so let's just leave it at that.
  - landemva 4y ago
    Small customers get BTC from an exchange, which keeps their accounting internally. No transaction volume limits. Later the small customer may move that BTC to self-custody, which could be an on-chain transaction or LN or other side chain with more transaction capacity.
twblalock 4y ago
That didn't prevent multiple runs against Washington Mutual in 2008, and it won't prevent runs now. People are worried that they won't be able to get to their money even if it is insured. Plus, even if the "typical" consumers don't freak out, businesses might. There are a lot of businesses with accounts over the FDIC limit. Only about 60% of bank deposits in the US are insured.
- chrisdfrey 4y ago
  Right, and the clientele of SVB was largely businesses. Only 7% of SVB deposits were FDIC insured, making them extra vulnerable to bank runs.
- flangola7 4y ago
  >People are worried that they won't be able to get to their money even if it is insured. If the US government is unable to cover those claims then you have much bigger problems to worry about.
  - notch898a 4y ago
    If I thought the US government was going to fail I'd simply try to be the first to convert my dollars to a dense and valuable commodity, like gold, and then find another government to live under. It's not like people pulling out dollars have to keep their wealth in dollars.
    - antihipocrat 4y ago
      If it ever got that bad a can of beans would be worth more than almost anything.
      - ThalesX 4y ago
        Not the first failing empire in the history of the world...
  - heisenbit 4y ago
    The ability to mint money is unlimited. The ones being eventually bailed in will be foreign debt holders via inflation.

>it's based entirely on consumer confidence Not typical consumers, right? Typical bank consumers have < $250k in their account, and thus there's no reason for them to cause a run.

QuarterReptile 4y ago

I guess maybe if all the small customers pull out of index funds to flee to bitcoin? Not sure.

gmane 4y ago
How would they even do that? Bitcoin handles ~350k transactions per day. VTI (Vanguard's Total Stock Index), a large size fund is on average traded 3,670k per day. That's one fund. There is no reasonable way for small customers to pull out of index funds to bitcoin unless there is a fundamental change to how bitcoin operates.
- sowbug 4y ago
  VTI (Vanguard's Total Stock Index), a large size fund is on average traded 3,670k per day. I doubt those VTI transactions are each of a single share, which is the only way the 3.67M number you cite would match VTI's trading history. But nobody's mind was ever changed about Bitcoin on an HN comment thread, so let's just leave it at that.
- landemva 4y ago
  Small customers get BTC from an exchange, which keeps their accounting internally. No transaction volume limits. Later the small customer may move that BTC to self-custody, which could be an on-chain transaction or LN or other side chain with more transaction capacity.

twblalock 4y ago

That didn't prevent multiple runs against Washington Mutual in 2008, and it won't prevent runs now. People are worried that they won't be able to get to their money even if it is insured. Plus, even if the "typical" consumers don't freak out, businesses might. There are a lot of businesses with accounts over the FDIC limit. Only about 60% of bank deposits in the US are insured.

chrisdfrey 4y ago
Right, and the clientele of SVB was largely businesses. Only 7% of SVB deposits were FDIC insured, making them extra vulnerable to bank runs.
flangola7 4y ago
>People are worried that they won't be able to get to their money even if it is insured. If the US government is unable to cover those claims then you have much bigger problems to worry about.
- notch898a 4y ago
  If I thought the US government was going to fail I'd simply try to be the first to convert my dollars to a dense and valuable commodity, like gold, and then find another government to live under. It's not like people pulling out dollars have to keep their wealth in dollars.
  - antihipocrat 4y ago
    If it ever got that bad a can of beans would be worth more than almost anything.
    - ThalesX 4y ago
      Not the first failing empire in the history of the world...
- heisenbit 4y ago
  The ability to mint money is unlimited. The ones being eventually bailed in will be foreign debt holders via inflation.