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Ironically banks are some of the least shareholder friendly businesses, they direct a lot of profits to their own bonuses during good times rather than expandin

Ironically banks are some of the least shareholder friendly businesses, they direct a lot of profits to their own bonuses during good times rather than expanding their balance sheet or returning the profits to shareholders. I wonder how much this paradigm contributes to bad outcomes as it could easily incentivize short-termism and recklessness. Poisoning the books with bad choices that won’t take effect for multiple years or a decade, or comes with individually asymmetric risk less than the business’ asymmetric risk (10% of bank failure just means 10% I retire early) seems really tempting when it means years of big bonuses. Given that banks seem to have an uncanny ability to destroy themselves in spite of an ever increasing set of regulations trying to stop them from doing so, and the current trend indicates in the future we’ll be left with just a few blessed TBTF banks, I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added. It’s the least-worst outcome, because otherwise people are going to turn to crypto to avoid the for-profit oligopoly subsidized by repeated debasement and access to Fed lending/liquidity tools unavailable to the public.

stephenitis 3y ago
TBTF = To Big To Fail
CPLX 3y ago
> banks seem to have an uncanny ability to destroy themselves in spite of an ever increasing set of regulations That’s the opposite of what is happening. Regulation has been decreasing.
- aikinai 3y ago
  Depends heavily on your time scale.
  - djbusby 3y ago
    What scale should we use?
    - krastanov 3y ago
      Something between 150 and 300 years seems reasonable.
      - thfuran 3y ago
        That seems way too long to reasonably be considered relevant to modern banking in the US. At one end, it pre-dates this country, and the other still pre-dates the start of the gold standard, let alone its end.
        kodah 3y ago
        100 years seems reasonable. That would include the gold standard change, some significant monetary changes, and the great depression. I disagree that banking regulation is too much, but I do think the Federal government has an obligation to make regulation implementation easier to implement. We also have some non-sensical banking regulations that continue to victimize sex workers for the sake of it, so I think it's a mixed bag.
    - _heimdall 3y ago
      Well if you go aback 6 years bank regulation decreased, make it 15 years and regulation has increased dramatically. Really you could stretch that back out to 100 years and bank regulation has trended higher, so it'd seem only a very short time scale has regulation decreasing.
- bko 3y ago
  By what measure has it been decreasing? I never heard of laws being removed or sunsetted just new legislation added on top of existing framework. Maybe some of it counteracts existing laws but the complexity is the problem. Or maybe number of regulators? What was the last time a regulatory agency was disbanded rather than a new one added (e.g. consumer protection bureau). Or number of employees in regulatory bodies, or budgets. Its tough to find a metric that says regulations have decreased. I think the regulations add a false sense of security. If it's highly regulated like the financial industry people just follow the regulations and think that's enough. Investors don't care and assume correctly any mess up at the bank with be bailed out. Less regulated industries tend the have more savvy buyers because you know there won't be a backstop
  - deleted 3y ago
    [deleted]
  - EFreethought 3y ago
    The Economic Growth, Regulatory Relief, and Consumer Protection Act exempted banks with less than $250 billion in assets from most of the Dodd-Frank Act. They no longer had to have stress tests and it lowered liquidity levels. Under Dodd-Frank, the level was $50 billion. So far all four bank failures that have made headlines recently (Silvergate, Silicon Valley, Signature and now First Republic) were all under the new threshold. I think Silvergate was under the old threshold as well, but that still leaves 3 out of 4 that could have been prevented if Dodd-Frank were left in place. Also: "new legislation added on top of existing framework" can result in less regulation if the new legislation nullifies or repeals or (in this case) exempts some participants from current regulations.
borissk 3y ago
There's too much money in the finance industry, creating very strong incentives for the players to resort to shady tactics. A strong government can enforce regulations, but given the current political situation in the US that's not very likely. This is pretty much the main reason BitCoin and many other coins were created - remove the corruption and the unfair advantage some actors in the finance industry enjoy. Why do you think that people resorting to crypto is a bad scenario? The US government providing basic bank accounts is never going to pass in Congress - the republicans are going to be against it based on their small government ideas and many democrats are depending on the money from sponsors in the finance industry. The Fed is owned by the banks anyway.
- chii 3y ago
  > remove the corruption and the unfair advantage some actors in the finance industry enjoy only to put themselves in the very same seat, but without any actual regulatory oversight.
  - borissk 3y ago
    How is it the same seat? The creation of new coins is ruled by algorithms, not by well connected people.
    - chii 3y ago
      > ruled by algorithms, not by well connected people. the earlier coiners gets a lot more. Just like today's financial institutions have gotten there by just being around early enough to have captured a lot more. All i see in bitcoin (and etherium) are just people who wish they were those old bankers.
    - pjc50 3y ago
      Anyone can create a new coin and rugpull it. This is not an improvement.
    - UncleMeat 3y ago
      And those algorithms are largely driven by well connected people.
pjc50 3y ago
> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added This is simple, straightforward, and disintermediatory, so I imagine everyone involved will fight to the death to prevent it happening.
- _heimdall 3y ago
  There is a real trade-off there when the government has direct access to and control of citizens' bank accounts. The idea that the government would know specifically how much we spend, where we spend it, and could deny transactions sounds pretty distopian to me. With that said, as closely tied our government and the major banks are there might not be much functional difference from power they have today.
  - jen20 3y ago
    If you use cash, the “government” does not know where you spend it. If you use a credit card, it’s a virtual certainty that they do already.
    - _heimdall 3y ago
      For cash transactions, I believe anything over $600 is supposed to be reported now. The limit used to be $10k but was raised recently. With credit cards, the government shouldn't know as they shouldn't be involved, but they almost certainly do because overreach. Congress could always pass a law to block that or an individual could sue and claim something similar to illegal search. As soon as the government is the bank there's no way to bifricate the two, the deal is done.
      - zamnos 3y ago
        > The implementation of the Internal Revenue Service's "$600 rule" is being postponed until next year https://www.cnbc.com/amp/select/irs-600-reporting-rule-delayed/ https://www.cnbc.com/amp/select/irs-600-reporting-rule-delay... (From Feb 2023)
JKCalhoun 3y ago
> I think we ought to consider a system where the Government or Fed provides the core functionality... I have been told that the Chinese government own the big Chinese banks. Is this a good or bad thing? (Or am I mistaken?)
- Mtinie 3y ago
  As a depositor, you might be better off. As an investor, I presume you’d be better off with the current situation, even when there are occasional hair cuts.
  - MSFT_Edging 3y ago
    When you consider the % of people globally, or even country by country, most just need a safe place to keep their money to participate in institutions. Most don't have enough money to place bets on the stock market. When most folks(US and China) don't have spare cash to bet with, safe retail banking is incredibly important. In the US, tons of service workers take their paycheck with cashapp because so many retail offerings for low earners are notorious sharks with punishing overdraft fees and account minimums. If people in a society are required to participate in an institution, there should be options for people that are not profit motivated. Anything profit motivated will also be motivated by increased profit which in turn will cannibalize their userbase when rate of profit declines, which almost always sends many people into the woodchipper until it is corrected. This should not be the default.
- jpgvm 3y ago
  You are mostly correct. The largest retail banks in China are SOEs, so called State Owned Enterprises. However while these banks are the backbone of the retail banking sector the rural banks and investment banks are increasingly more relevant when doing business in China because the state owned banks are very risk adverse and operate with gigantic capital reserves. It's an interesting system because it basically insulates the retail banking sector from any and all shenanigans however has led to explosion of risk in the private sector. China has been trying to pare back this risk and leverage of the financial sector for over 10 years but every time they start some global crisis starts and they have to stop.
whatever1 3y ago
Banks and natural disaster insurance companies have super fat risk tail. In the worst case everyone comes asking for their money right now, and we know this is impossible to be satisfied.
philip1209 3y ago
> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added. https://www.history.com/topics/us-government-and-politics/bank-of-the-united-states https://www.history.com/topics/us-government-and-politics/ba...
ComputerGuru 3y ago
> Ironically banks are some of the least shareholder friendly businesses, they direct a lot of profits to their own bonuses during good times rather than expanding their balance sheet or returning the profits to shareholders. From what I can see, private equity firms are actually even worse. It’s curious that no major shareholder has sued any of those for breach of fiduciary duty.
- FormerBandmate 3y ago
  It’s extremely hard to do shareholder lawsuits around fiduciary duty because of the business judgment rule. Companies can basically do anything as long as it could theoretically make shareholders richer. It’s kind of dumb tbh
BurningFrog 3y ago
> expanding their balance sheet I keep seeing this jargon, and I have to admit I don't know what it means?
- deleted 3y ago
  [deleted]
- rrrrrrrrrrrryan 3y ago
  A balance sheet is one of the four main financial statements that businesses have to produce. It describes how much stuff you've got (assets) and how much money you owe others (liabilities). To expand your balance sheet means to load up on assets. In the parent comment's specific example, it means that the bank could simply hold onto the money it makes, rather than paying that money out as bonuses to the executives or dividends to the shareholders. This would give the bank a better cash cushion to weather a storm (e.g. interest rates rising unexpectedly, account holders pulling out their deposits, etc.)
  - BurningFrog 3y ago
    Thanks! So "expanding their balance sheet" here translates to "keeping the money"
    - rrrrrrrrrrrryan 3y ago
      In this case, it's very close, yes. It's worth noting that you can also expand your balance sheet by buying any assets: spending the money on real estate, government bonds, or even using the money to buy your own company stock would also expand the balance sheet, as long as the company retains ownership of those assets. But for people familiar with basic business terminology, it communicates something else, too. In business, there's a core belief that money at rest is money wasted. You generally want to use your money to buy something rather than letting it pile up. Saying that you're using the money to "expand your balance sheet" implies that we shouldn't think of that money as merely idle, undeployed capital - in fact, it's being used for a very specific purpose: to make the business healthier. Companies with healthier balance sheets are better prepared to handle unexpected scenarios, and their stock is more attractive to investors. A closer layman's translation might be, "keeping the profits, to make the business healthier."
throw0101a 3y ago
> […] I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free […] The Odd Lots podcast recently had an episode "Is It Time For Public Checking Accounts at the Fed?": > When Silicon Valley Bank failed, the government stepped in and guaranteed that all accounts — even those well above the FDIC threshold for deposit insurance — would be made whole. So now people are wondering whether all accounts at every bank are implicitly guaranteed, regardless of their size. But if they are, then what is the point of private, for-profit retail banking? On this episode of the podcast, we speak with Saule Omarova, a professor at Cornell Law School. She had been nominated by President Biden to head the Office of the Comptroller of the Currency, but was forced to withdraw due to fierce opposition from the banking lobby. That opposition was based, in part, on her endorsement of public checking accounts at the Federal Reserve. But what was a seemingly "out there" view a year ago, is now firmly within the Overton Window of political possibilities. On this episode, we discuss the SVB disaster, what it means for banking, and the case for a public option. * https://www.podchaser.com/podcasts/odd-lots-40661/episodes/is-it-time-for-public-checking-167525227 https://www.podchaser.com/podcasts/odd-lots-40661/episodes/i... * https://www.youtube.com/watch?v=3Zkzpz9aK3I https://www.youtube.com/watch?v=3Zkzpz9aK3I * Also on Apple Podcasts, etc. Transcript: * https://www.bloomberg.com/news/articles/2023-03-23/transcript-saule-omarova-on-the-case-for-public-accounts-at-the-fed https://www.bloomberg.com/news/articles/2023-03-23/transcrip... * https://archive.is/9yROE https://archive.is/9yROE
atkailash 3y ago
[dead]
nostrademons 3y ago
[flagged]
- rgbrgb 3y ago
  > the core functionality of “let me put $X in an account so I can use $X in the future” > Note that this is exactly the core functionality that Bitcoin provides. People who bought BTC 1 year ago would love to use that functionality today, but that's not actually on offer. The actual offering is a lot more like buying an equity... you might be able to get $X out in the future, or a lot more, or a lot less. Maybe there's a reliable stablecoin that could provide that though (and maybe that's what you're eluding to).
  - nostrademons 3y ago
    You get X BTC out, you don't get $X. If prices were stably denominated in BTC it'd be worth the same amount of goods. But then, prices aren't exactly stably denominated in $USD these days, as a lot of savers have found out to their chagrin. "Price stability" is one of those value-adds to a currency that's pretty important, and it's also one that's been bolted on repeatedly (stablecoins) to cryptocurrency. IMHO a more interesting property would be algorithmically pegging a cryptocurrency to a basket of goods rather than to the USD, though, because the USD has had a pretty shitty peg to that basket of goods over time. There are actually cryptocurrencies that do this, but they rely on centralized oracles that have the same problem as the Fed and the CPI - it'd be interesting if a cryptocurrency could embed price stability into the protocol itself.
- r00fus 3y ago
  Bitcoin behaves like a security, not a currency. So yeah, no thanks.
anchochilis 3y ago
> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added. Don't credit unions already provide this service?
smabie 3y ago
This is called a T-note? And it is issued by the government?

stephenitis 3y ago

TBTF = To Big To Fail

CPLX 3y ago

> banks seem to have an uncanny ability to destroy themselves in spite of an ever increasing set of regulations That’s the opposite of what is happening. Regulation has been decreasing.

aikinai 3y ago
Depends heavily on your time scale.
- djbusby 3y ago
  What scale should we use?
  - krastanov 3y ago
    Something between 150 and 300 years seems reasonable.
    - thfuran 3y ago
      That seems way too long to reasonably be considered relevant to modern banking in the US. At one end, it pre-dates this country, and the other still pre-dates the start of the gold standard, let alone its end.
      - kodah 3y ago
        100 years seems reasonable. That would include the gold standard change, some significant monetary changes, and the great depression. I disagree that banking regulation is too much, but I do think the Federal government has an obligation to make regulation implementation easier to implement. We also have some non-sensical banking regulations that continue to victimize sex workers for the sake of it, so I think it's a mixed bag.
  - _heimdall 3y ago
    Well if you go aback 6 years bank regulation decreased, make it 15 years and regulation has increased dramatically. Really you could stretch that back out to 100 years and bank regulation has trended higher, so it'd seem only a very short time scale has regulation decreasing.
bko 3y ago
By what measure has it been decreasing? I never heard of laws being removed or sunsetted just new legislation added on top of existing framework. Maybe some of it counteracts existing laws but the complexity is the problem. Or maybe number of regulators? What was the last time a regulatory agency was disbanded rather than a new one added (e.g. consumer protection bureau). Or number of employees in regulatory bodies, or budgets. Its tough to find a metric that says regulations have decreased. I think the regulations add a false sense of security. If it's highly regulated like the financial industry people just follow the regulations and think that's enough. Investors don't care and assume correctly any mess up at the bank with be bailed out. Less regulated industries tend the have more savvy buyers because you know there won't be a backstop
- deleted 3y ago
  [deleted]
- EFreethought 3y ago
  The Economic Growth, Regulatory Relief, and Consumer Protection Act exempted banks with less than $250 billion in assets from most of the Dodd-Frank Act. They no longer had to have stress tests and it lowered liquidity levels. Under Dodd-Frank, the level was $50 billion. So far all four bank failures that have made headlines recently (Silvergate, Silicon Valley, Signature and now First Republic) were all under the new threshold. I think Silvergate was under the old threshold as well, but that still leaves 3 out of 4 that could have been prevented if Dodd-Frank were left in place. Also: "new legislation added on top of existing framework" can result in less regulation if the new legislation nullifies or repeals or (in this case) exempts some participants from current regulations.

borissk 3y ago

There's too much money in the finance industry, creating very strong incentives for the players to resort to shady tactics. A strong government can enforce regulations, but given the current political situation in the US that's not very likely. This is pretty much the main reason BitCoin and many other coins were created - remove the corruption and the unfair advantage some actors in the finance industry enjoy. Why do you think that people resorting to crypto is a bad scenario? The US government providing basic bank accounts is never going to pass in Congress - the republicans are going to be against it based on their small government ideas and many democrats are depending on the money from sponsors in the finance industry. The Fed is owned by the banks anyway.

chii 3y ago
> remove the corruption and the unfair advantage some actors in the finance industry enjoy only to put themselves in the very same seat, but without any actual regulatory oversight.
- borissk 3y ago
  How is it the same seat? The creation of new coins is ruled by algorithms, not by well connected people.
  - chii 3y ago
    > ruled by algorithms, not by well connected people. the earlier coiners gets a lot more. Just like today's financial institutions have gotten there by just being around early enough to have captured a lot more. All i see in bitcoin (and etherium) are just people who wish they were those old bankers.
  - pjc50 3y ago
    Anyone can create a new coin and rugpull it. This is not an improvement.
  - UncleMeat 3y ago
    And those algorithms are largely driven by well connected people.

pjc50 3y ago

> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added This is simple, straightforward, and disintermediatory, so I imagine everyone involved will fight to the death to prevent it happening.

_heimdall 3y ago
There is a real trade-off there when the government has direct access to and control of citizens' bank accounts. The idea that the government would know specifically how much we spend, where we spend it, and could deny transactions sounds pretty distopian to me. With that said, as closely tied our government and the major banks are there might not be much functional difference from power they have today.
- jen20 3y ago
  If you use cash, the “government” does not know where you spend it. If you use a credit card, it’s a virtual certainty that they do already.
  - _heimdall 3y ago
    For cash transactions, I believe anything over $600 is supposed to be reported now. The limit used to be $10k but was raised recently. With credit cards, the government shouldn't know as they shouldn't be involved, but they almost certainly do because overreach. Congress could always pass a law to block that or an individual could sue and claim something similar to illegal search. As soon as the government is the bank there's no way to bifricate the two, the deal is done.
    - zamnos 3y ago
      > The implementation of the Internal Revenue Service's "$600 rule" is being postponed until next year https://www.cnbc.com/amp/select/irs-600-reporting-rule-delayed/ https://www.cnbc.com/amp/select/irs-600-reporting-rule-delay... (From Feb 2023)

JKCalhoun 3y ago

> I think we ought to consider a system where the Government or Fed provides the core functionality... I have been told that the Chinese government own the big Chinese banks. Is this a good or bad thing? (Or am I mistaken?)

Mtinie 3y ago
As a depositor, you might be better off. As an investor, I presume you’d be better off with the current situation, even when there are occasional hair cuts.
- MSFT_Edging 3y ago
  When you consider the % of people globally, or even country by country, most just need a safe place to keep their money to participate in institutions. Most don't have enough money to place bets on the stock market. When most folks(US and China) don't have spare cash to bet with, safe retail banking is incredibly important. In the US, tons of service workers take their paycheck with cashapp because so many retail offerings for low earners are notorious sharks with punishing overdraft fees and account minimums. If people in a society are required to participate in an institution, there should be options for people that are not profit motivated. Anything profit motivated will also be motivated by increased profit which in turn will cannibalize their userbase when rate of profit declines, which almost always sends many people into the woodchipper until it is corrected. This should not be the default.
jpgvm 3y ago
You are mostly correct. The largest retail banks in China are SOEs, so called State Owned Enterprises. However while these banks are the backbone of the retail banking sector the rural banks and investment banks are increasingly more relevant when doing business in China because the state owned banks are very risk adverse and operate with gigantic capital reserves. It's an interesting system because it basically insulates the retail banking sector from any and all shenanigans however has led to explosion of risk in the private sector. China has been trying to pare back this risk and leverage of the financial sector for over 10 years but every time they start some global crisis starts and they have to stop.

whatever1 3y ago

Banks and natural disaster insurance companies have super fat risk tail. In the worst case everyone comes asking for their money right now, and we know this is impossible to be satisfied.

philip1209 3y ago

> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added. https://www.history.com/topics/us-government-and-politics/bank-of-the-united-states https://www.history.com/topics/us-government-and-politics/ba...

ComputerGuru 3y ago

> Ironically banks are some of the least shareholder friendly businesses, they direct a lot of profits to their own bonuses during good times rather than expanding their balance sheet or returning the profits to shareholders. From what I can see, private equity firms are actually even worse. It’s curious that no major shareholder has sued any of those for breach of fiduciary duty.

FormerBandmate 3y ago
It’s extremely hard to do shareholder lawsuits around fiduciary duty because of the business judgment rule. Companies can basically do anything as long as it could theoretically make shareholders richer. It’s kind of dumb tbh

BurningFrog 3y ago

> expanding their balance sheet I keep seeing this jargon, and I have to admit I don't know what it means?

deleted 3y ago
[deleted]
rrrrrrrrrrrryan 3y ago
A balance sheet is one of the four main financial statements that businesses have to produce. It describes how much stuff you've got (assets) and how much money you owe others (liabilities). To expand your balance sheet means to load up on assets. In the parent comment's specific example, it means that the bank could simply hold onto the money it makes, rather than paying that money out as bonuses to the executives or dividends to the shareholders. This would give the bank a better cash cushion to weather a storm (e.g. interest rates rising unexpectedly, account holders pulling out their deposits, etc.)
- BurningFrog 3y ago
  Thanks! So "expanding their balance sheet" here translates to "keeping the money"
  - rrrrrrrrrrrryan 3y ago
    In this case, it's very close, yes. It's worth noting that you can also expand your balance sheet by buying any assets: spending the money on real estate, government bonds, or even using the money to buy your own company stock would also expand the balance sheet, as long as the company retains ownership of those assets. But for people familiar with basic business terminology, it communicates something else, too. In business, there's a core belief that money at rest is money wasted. You generally want to use your money to buy something rather than letting it pile up. Saying that you're using the money to "expand your balance sheet" implies that we shouldn't think of that money as merely idle, undeployed capital - in fact, it's being used for a very specific purpose: to make the business healthier. Companies with healthier balance sheets are better prepared to handle unexpected scenarios, and their stock is more attractive to investors. A closer layman's translation might be, "keeping the profits, to make the business healthier."

throw0101a 3y ago

> […] I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free […] The Odd Lots podcast recently had an episode "Is It Time For Public Checking Accounts at the Fed?": > When Silicon Valley Bank failed, the government stepped in and guaranteed that all accounts — even those well above the FDIC threshold for deposit insurance — would be made whole. So now people are wondering whether all accounts at every bank are implicitly guaranteed, regardless of their size. But if they are, then what is the point of private, for-profit retail banking? On this episode of the podcast, we speak with Saule Omarova, a professor at Cornell Law School. She had been nominated by President Biden to head the Office of the Comptroller of the Currency, but was forced to withdraw due to fierce opposition from the banking lobby. That opposition was based, in part, on her endorsement of public checking accounts at the Federal Reserve. But what was a seemingly "out there" view a year ago, is now firmly within the Overton Window of political possibilities. On this episode, we discuss the SVB disaster, what it means for banking, and the case for a public option. * https://www.podchaser.com/podcasts/odd-lots-40661/episodes/is-it-time-for-public-checking-167525227 https://www.podchaser.com/podcasts/odd-lots-40661/episodes/i... * https://www.youtube.com/watch?v=3Zkzpz9aK3I https://www.youtube.com/watch?v=3Zkzpz9aK3I * Also on Apple Podcasts, etc. Transcript: * https://www.bloomberg.com/news/articles/2023-03-23/transcript-saule-omarova-on-the-case-for-public-accounts-at-the-fed https://www.bloomberg.com/news/articles/2023-03-23/transcrip... * https://archive.is/9yROE https://archive.is/9yROE

atkailash 3y ago

[dead]

nostrademons 3y ago

[flagged]

rgbrgb 3y ago
> the core functionality of “let me put $X in an account so I can use $X in the future” > Note that this is exactly the core functionality that Bitcoin provides. People who bought BTC 1 year ago would love to use that functionality today, but that's not actually on offer. The actual offering is a lot more like buying an equity... you might be able to get $X out in the future, or a lot more, or a lot less. Maybe there's a reliable stablecoin that could provide that though (and maybe that's what you're eluding to).
- nostrademons 3y ago
  You get X BTC out, you don't get $X. If prices were stably denominated in BTC it'd be worth the same amount of goods. But then, prices aren't exactly stably denominated in $USD these days, as a lot of savers have found out to their chagrin. "Price stability" is one of those value-adds to a currency that's pretty important, and it's also one that's been bolted on repeatedly (stablecoins) to cryptocurrency. IMHO a more interesting property would be algorithmically pegging a cryptocurrency to a basket of goods rather than to the USD, though, because the USD has had a pretty shitty peg to that basket of goods over time. There are actually cryptocurrencies that do this, but they rely on centralized oracles that have the same problem as the Fed and the CPI - it'd be interesting if a cryptocurrency could embed price stability into the protocol itself.
r00fus 3y ago
Bitcoin behaves like a security, not a currency. So yeah, no thanks.

anchochilis 3y ago

> I think we ought to consider a system where the Government or Fed provides the core functionality of “let me put $X in an account so I can use $X in the future” for free and banks compete based on value added. Don't credit unions already provide this service?

smabie 3y ago

This is called a T-note? And it is issued by the government?