4 ms·
what ? explain.
by bubbleRefuge 4y ago
what ? explain.
- ktta 4y agoFDIC - Federal Deposit Insurance Corporation It is not the Fed itself, but a separate entity that doesn't receive any federal funding. The $250k insurance you hear about is not free, it has a cost associated with it: https://www.fdic.gov/deposit/insurance/assessments/proposed.html https://www.fdic.gov/deposit/insurance/assessments/proposed.... Just like your $25k car has an insurance premium, these bank accounts are also insured because they pay a premium. Now if your car's value is $250k, wouldn't you expect the insurance premium to be higher? What if your car's value is infinity dollars? I love when people on HN start their comment with "Pretty Simple" or a variant of it, because it almost always means they're wrong.
- nonethewiser 4y agoIt comes from the idea that there are no real rules in economics and that we are oppressed by some malevolent force.
- bubbleRefuge 4y agoThe Fed government as an issuer of currency can fund anything to infinity so long as Congress authorizes it. They change numbers in a spread sheet to create money. Rules like FDIC insurance are vestiges of a gold standard era when money was not fungible.
- ktta 4y agoWhat? Money was always fungible. In the case of crisis, sure fed can step in, but you can't except basic economics to go away when you except to be insured to infinity dollars (and for what cost, btw?)
- bubbleRefuge 4y agono money was a receipt for a gold bar amount which is not very fungible. How does basic econonmics go away ?