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> The government should stop bailing out banks every time they screw up. I think the bank runs become extremely contagious if you do that, affecting the whole

by jowea 3y ago

> The government should stop bailing out banks every time they screw up. I think the bank runs become extremely contagious if you do that, affecting the whole economy. > Otherwise they might as well bail out Tether. What's the difference? The difference is that Tether doesn't have to follow the regulations trying to avoid bank insolvency. SVB was insolvent by a relatively small margin IIRC. For all we know Tether is 50% hot air.

matheusmoreira 3y ago
> I think the bank runs become extremely contagious if you do that, affecting the whole economy. Let them. Why contain it? Maybe the world would be a whole lot better if people faced the consequences of their choices. Maybe after enough people lose everything, they'd learn that banks are dangerous and would stop putting their money in them. With less capital in banks, there would be less loans and credit. That means less inflation. Less planet-destroying credit-fueled exponential growth. > SVB was insolvent by a relatively small margin IIRC. For all we know Tether is 50% hot air. It's either solvent or insolvent. There is no margin. Banks are insolvent by definition. There is not a single bank on this planet that can cover 100% of its withdrawals. If push comes to shove, the governments will have to step in.
- jowea 3y ago
  > Maybe after enough people lose everything, they'd learn that banks are dangerous and would stop putting their money in them. With less capital in banks, there would be less loans and credit. That means less inflation. Less planet-destroying credit-fueled exponential growth. Maybe, but I wouldn't count on any government wanting to try. And it does seem a bit of a economic crisis without a need. > It's either solvent or insolvent. There is no margin. I think it matter whether the bailout is for 1 billion or 10. Or even without a bailout, whether depositors get back 95% the next week or 10% after 2 years on bankruptcy court.

by jowea 3y ago

matheusmoreira 3y ago

> I think the bank runs become extremely contagious if you do that, affecting the whole economy. Let them. Why contain it? Maybe the world would be a whole lot better if people faced the consequences of their choices. Maybe after enough people lose everything, they'd learn that banks are dangerous and would stop putting their money in them. With less capital in banks, there would be less loans and credit. That means less inflation. Less planet-destroying credit-fueled exponential growth. > SVB was insolvent by a relatively small margin IIRC. For all we know Tether is 50% hot air. It's either solvent or insolvent. There is no margin. Banks are insolvent by definition. There is not a single bank on this planet that can cover 100% of its withdrawals. If push comes to shove, the governments will have to step in.

jowea 3y ago
> Maybe after enough people lose everything, they'd learn that banks are dangerous and would stop putting their money in them. With less capital in banks, there would be less loans and credit. That means less inflation. Less planet-destroying credit-fueled exponential growth. Maybe, but I wouldn't count on any government wanting to try. And it does seem a bit of a economic crisis without a need. > It's either solvent or insolvent. There is no margin. I think it matter whether the bailout is for 1 billion or 10. Or even without a bailout, whether depositors get back 95% the next week or 10% after 2 years on bankruptcy court.