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Deposit insurance is a moral hazard. It encourages people to be reckless with where they put their money. The vast majority of the population would not have th
by ineedasername 4y ago
Deposit insurance is a moral hazard. It encourages people to be reckless with where they put their money.
The vast majority of the population would not have the time or ability to digest and perform a comparative analysis between countless pages of bank prospectuses. We put that effort into stocks now. Most use some variety of funds, often suggested by general guidance from 401k plans based on a vague risk tolerance and retirement goals.
- goodluckchuck 4y agoYes, but what’s the problem? Ignorance is not a better solution. People could digest a few basic statistics like the reserve ratio of the bank. We do this with Energy Star appliances. Ultimately I don’t care if people change their behavior, but I’m offended by the fact that I’ve opened several accounts in my life and none have clearly indicated that they don’t keep most of my money. I’ve even read a couple sets of the papers that come with an account and they didn’t seem to say anything about it. As far as I’m concerned banking is fraud / conversion.