4 ms·

Previous generations learned the hard way that when you lose your life savings, once is too often. A lot of folks never recovered after the first time it happen

by ttfkam 3y ago

Previous generations learned the hard way that when you lose your life savings, once is too often. A lot of folks never recovered after the first time it happened to them. Identifying a huckster isn't as easy as you say. A lot of folks lost everything in a local savings and loan, not some fly-by-night penny stock broker. Crypto will not stop this. Crypto has no intrinsic value. A car has intrinsic value. A house has intrinsic value. Farmland has intrinsic value. If everyone decided all these things had zero currency value, you can still transport using the car. You can still keep the rain out in a house. Crypto leaves you with electron patterns in a box. When the US dollar has dipped (and gold has gotten stronger), has the measured value of any crypto "currency" increased proportionally? No. Often it dips along with the dollar. When folks feel the crunch, they sell their crypto to pay bills. The reduced demand lowers the value of crypto. When the dollar is strongest and employment is robust, folks buy more crypto with their increased disposable income, raising demand and proportionally the price. It's a Ponzi scheme. A Ponzi scheme with a much higher fraudster-to-legit ratio than other financial options. There ain't no FDIC for Bitcoin. Be prepared for crypto's 1929 moment.

roenxi 3y ago
If you add all the pieces in your first paragraph together, the obvious answer is people need to stop giving all their money to 1 institution that they can't assess the creditworthiness of. It is a bad idea. Even if the money is then backstopped. The current system encourages them to do this. And you say "lost their life savings" as though the current system doesn't do that. Anyone who has attempted to hold their life savings in a bank is being gently wiped out by inflation. We traded "might happen" for "government policy that this will happen". They're losing most of the value in their cash every 25 years. The official policies are consistently inflation combined with low interest rates. > Be prepared for crypto's 1929 moment. Hasn't it has already lost 80% of its value more than once? I'd hope people are prepared with a history like that.
- ttfkam 3y ago
  > the obvious answer is people need to stop giving all their money to 1 institution that they can't assess the creditworthiness of. You literally just described everyone who has a bank account. The finance sector is anything but transparent. See: Bear Sterns. > I'd hope people are prepared with a history like that. People play the lottery. Humans are REALLY bad at probability. There's an argument that the human brain itself is bad at it. Human perception is the source of optical illusions, sleight of hand, logical fallacies, etc. We are not biologically primed to handle these kinds of problems. Snake on the ground is a threat? Excellent. Monty Hall Problem? Even after explaining it, a majority of folks still reject the solution because it isn't naturally intuitive.
  - roenxi 3y ago
    roenxi: "This is a terrible idea" ttfkam: "You literally just described everyone who has a bank account." In some sense, well spotted. That is why I think the system is a bit cooked. People can't just put hand their money over to one institution, ignore what is done with it and expect to get a good outcome. This is a good way to get vast capital misallocations and, eventually, a lot of people ending up poor. More people than the alternative of the occasional bank run. I can see an argument for setting up full-reserve banks. But if people are going to lend their money to institutions that on-lend it, we should be seeing banking institutes get rolled up regularly and depositors losing at least some of their money. People shouldn't be allowed to ignore what is done with their money; it leads to some of the worst incentives in the modern economy. But technically no, some people have their money spread over a few institutions. And most people don't seem to have cash savings these days anyway (which is rational given the inflation regime).

by ttfkam 3y ago

roenxi 3y ago

If you add all the pieces in your first paragraph together, the obvious answer is people need to stop giving all their money to 1 institution that they can't assess the creditworthiness of. It is a bad idea. Even if the money is then backstopped. The current system encourages them to do this. And you say "lost their life savings" as though the current system doesn't do that. Anyone who has attempted to hold their life savings in a bank is being gently wiped out by inflation. We traded "might happen" for "government policy that this will happen". They're losing most of the value in their cash every 25 years. The official policies are consistently inflation combined with low interest rates. > Be prepared for crypto's 1929 moment. Hasn't it has already lost 80% of its value more than once? I'd hope people are prepared with a history like that.

ttfkam 3y ago
> the obvious answer is people need to stop giving all their money to 1 institution that they can't assess the creditworthiness of. You literally just described everyone who has a bank account. The finance sector is anything but transparent. See: Bear Sterns. > I'd hope people are prepared with a history like that. People play the lottery. Humans are REALLY bad at probability. There's an argument that the human brain itself is bad at it. Human perception is the source of optical illusions, sleight of hand, logical fallacies, etc. We are not biologically primed to handle these kinds of problems. Snake on the ground is a threat? Excellent. Monty Hall Problem? Even after explaining it, a majority of folks still reject the solution because it isn't naturally intuitive.
- roenxi 3y ago
  roenxi: "This is a terrible idea" ttfkam: "You literally just described everyone who has a bank account." In some sense, well spotted. That is why I think the system is a bit cooked. People can't just put hand their money over to one institution, ignore what is done with it and expect to get a good outcome. This is a good way to get vast capital misallocations and, eventually, a lot of people ending up poor. More people than the alternative of the occasional bank run. I can see an argument for setting up full-reserve banks. But if people are going to lend their money to institutions that on-lend it, we should be seeing banking institutes get rolled up regularly and depositors losing at least some of their money. People shouldn't be allowed to ignore what is done with their money; it leads to some of the worst incentives in the modern economy. But technically no, some people have their money spread over a few institutions. And most people don't seem to have cash savings these days anyway (which is rational given the inflation regime).