4 ms·

Great read. What conclusions should we draw? What should we do, if "money is no longer money"? It seems like most normal people operate as though money... is m

Great read. What conclusions should we draw? What should we do, if "money is no longer money"? It seems like most normal people operate as though money... is money. What should change in the way most normal people do what they do with... whatever it's called now?

toomuchtodo 4y ago
Sign up with a brokerage. Use their cash management account. Confirm its FDIC limits (many cover $1M+ with sweep functionality). If you exceed those limits, consider investing excess cash or cash equivalents in treasuries or money market funds that solely hold short dated government backed securities. This is what a Narrow Bank would do with demand deposits. Treasuries are backed by the Fed and the full faith and credit of the US gov; they are considered risk free. Tada! You have replicated narrow bank functionality. None of us have enough pull to change Fed fractional reserve and banking regulatory policy unfortunately. If you can't change the wind, adjust your sails. If you don't mind your deposits being exposed to fractional reserve lending and FDIC insurance, CDARS: https://www.intrafinetworkdeposits.com/ https://www.intrafinetworkdeposits.com/ To my knowledge, it can provide at least $50M in FDIC coverage with sweeps under the hood, although someone on HN mentioned the other day the limit might be more. Ask your financial services institution what their limit is. (not investing advice, educational purposes only)
- michaelt 4y ago
  > Tada! You have replicated narrow bank functionality. Brokerages will issue checks and debit cards now?
  - prottog 4y ago
    Many do, but even if they didn't, it's free to ACH money to your real bank checking account every now and then that you can spend and write checks with.
  - toomuchtodo 4y ago
    My brokerage issues checks, debit cards, and offers both inbound and outbound wires at no charge. Check with yours!
  - bombcar 4y ago
    Yup! Most just do it via a small internal FDIC bank (it's easier for them to have a bank for other reasons anyway): https://www.tdameritrade.com/investment-products/cash-solutions/cash-services.html https://www.tdameritrade.com/investment-products/cash-soluti... https://www.fidelity.com/cash-management/atm-debit-card https://www.fidelity.com/cash-management/atm-debit-card Even vanguard can do it, but they don't LIKE to: https://investor.vanguard.com/investor-resources-education/faqs/how-do-i-order-checks https://investor.vanguard.com/investor-resources-education/f...
- HDThoreaun 4y ago
  brokers lend cash sitting in accounts.
  - kccqzy 4y ago
    Can they lend treasuries sitting in accounts, if you don't have a margin account?
    - HDThoreaun 4y ago
      No, but treasuries lose value if interest rates increase.
      - kccqzy 4y ago
        Then hold short term treasuries. Problem solved.
  - toomuchtodo 4y ago
    Brokers only lend out of specific core cash accounts (FCASH at Fidelity, for example). Whether you hold cash in those account types is your choice, it isn’t mandatory. https://www.fidelity.com/mutual-funds/fidelity-funds/money-market-funds-fcash https://www.fidelity.com/mutual-funds/fidelity-funds/money-m...

toomuchtodo 4y ago

Sign up with a brokerage. Use their cash management account. Confirm its FDIC limits (many cover $1M+ with sweep functionality). If you exceed those limits, consider investing excess cash or cash equivalents in treasuries or money market funds that solely hold short dated government backed securities. This is what a Narrow Bank would do with demand deposits. Treasuries are backed by the Fed and the full faith and credit of the US gov; they are considered risk free. Tada! You have replicated narrow bank functionality. None of us have enough pull to change Fed fractional reserve and banking regulatory policy unfortunately. If you can't change the wind, adjust your sails. If you don't mind your deposits being exposed to fractional reserve lending and FDIC insurance, CDARS: https://www.intrafinetworkdeposits.com/ https://www.intrafinetworkdeposits.com/ To my knowledge, it can provide at least $50M in FDIC coverage with sweeps under the hood, although someone on HN mentioned the other day the limit might be more. Ask your financial services institution what their limit is. (not investing advice, educational purposes only)

michaelt 4y ago
> Tada! You have replicated narrow bank functionality. Brokerages will issue checks and debit cards now?
- prottog 4y ago
  Many do, but even if they didn't, it's free to ACH money to your real bank checking account every now and then that you can spend and write checks with.
- toomuchtodo 4y ago
  My brokerage issues checks, debit cards, and offers both inbound and outbound wires at no charge. Check with yours!
- bombcar 4y ago
  Yup! Most just do it via a small internal FDIC bank (it's easier for them to have a bank for other reasons anyway): https://www.tdameritrade.com/investment-products/cash-solutions/cash-services.html https://www.tdameritrade.com/investment-products/cash-soluti... https://www.fidelity.com/cash-management/atm-debit-card https://www.fidelity.com/cash-management/atm-debit-card Even vanguard can do it, but they don't LIKE to: https://investor.vanguard.com/investor-resources-education/faqs/how-do-i-order-checks https://investor.vanguard.com/investor-resources-education/f...
HDThoreaun 4y ago
brokers lend cash sitting in accounts.
- kccqzy 4y ago
  Can they lend treasuries sitting in accounts, if you don't have a margin account?
  - HDThoreaun 4y ago
    No, but treasuries lose value if interest rates increase.
    - kccqzy 4y ago
      Then hold short term treasuries. Problem solved.
- toomuchtodo 4y ago
  Brokers only lend out of specific core cash accounts (FCASH at Fidelity, for example). Whether you hold cash in those account types is your choice, it isn’t mandatory. https://www.fidelity.com/mutual-funds/fidelity-funds/money-market-funds-fcash https://www.fidelity.com/mutual-funds/fidelity-funds/money-m...