On Saturday, 27 October 2018 at 14:33:43 UTC, Neia Neutuladh
wrote:
On Sat, 27 Oct 2018 10:54:30 +0000, Joakim wrote:
I see, so you want other taxpayers to bail you out for your
mistakes, interesting.
One of the major points of having a government is to create
these regulations that make it less likely for individuals to
suffer from the actions of other people and organizations.
Another major point is to help people in need using the
collective efforts of society.
Programs like FDIC in the United States exist to serve both of
these: it's an extra set of regulations for banks, and
compliant banks will be bailed out if circumstances require. If
I choose an FDIC bank and the owners run off with my money, I
didn't make an avoidable mistake, any more than being mugged in
the street is me making a mistake.
If you oppose that, you're gunning for an eventual repeat of
the Great Depression.
Banks are special because of the payments system and because of
lending. In October 2008 Gordon Brown was within two hours of
shutting down the banking system and declaring a state of
emergency. If that had happened nobody would have been able to
make payments and new lending would have come to a halt.
In 2038 you won't need banks to make payments because
cryptocurrencies will be a viable alternative. And lending is
already being provided by asset managers. So the justification
for the combination of leverage and the mismatch in liquidity and
risk of banks deposit liabilities and their assets will
disappear. The component of TARP that constituted aid to the
financial system made a profit, but nonetheless there will be
very little public appetite for a repeat the next time around.
At the request of the UK debt management office, I met the
representative of the IMF financial stability review in early
2005. He had a bee in his bonnet about the dollar yen carry
trade and hedge funds: generals always fighting the last war. I
told him to worry about the banks and what they were buying. He
didn't listen. So regulators have little skill when it comes to
understanding systemic risk posed by the asset and liability
decisions of banks and so it will be good to make that function
redundant.
So cryptocurrencies matter. They are far from mature right now
though and it's not the most important thing if you have limited
resources to accept them. The best way to get the Foundation to
accept them might be to do the work to help...
