Bitcoin - Part 2

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ponderingturtle said:
You are certainly presenting it as a if it was negative, not a benefit.
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I can't speak for anyone else, but I certainly view FDIC as a negative, as I do insurance in general. This is due to the concept of moral hazard. FDIC removes the responsibility of depositors to engage in due diligence with respect to bank selection, at a greatly increased cost of banking in general, as well as placing the burden of socializing bank losses on savers, and taxpayers. I would much rather that depositors had to choose their banks wisely, and that I don't have to pay for their mistakes. Insurance companies are merely in the business of taking customer premiums and flipping them into the (risky) equity market, and then they expect the Fed to make them whole when they suffer losses threatening the solvency of the insurance company (see AIG, and Maiden Lane).

The same concept applies to Bitcoin. I suspect most users of Bitcoin are well aware of the risks, and probably don't feel the need to pay insurance premiums to "safeguard" their wealth. They have weighed the risks and costs of the banking system and made a choice.
Just like at the start of the great depression it was on the depositor to make sure his bank was solvent.
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As it should be. If we abolished fractional reserve banking, this wouldn't be much of an issue.
 
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Tippit said:
I can't speak for anyone else, but I certainly view FDIC as a negative, as I do insurance in general. This is due to the concept of moral hazard. FDIC removes the responsibility of depositors to engage in due diligence with respect to bank selection, at a greatly increased cost of banking in general, as well as placing the burden of socializing bank losses on savers, and taxpayers. I would much rather that depositors had to choose their banks wisely, and that I don't have to pay for their mistakes. Insurance companies are merely in the business of taking customer premiums and flipping them into the (risky) equity market, and then they expect the Fed to make them whole when they suffer losses threatening the solvency of the insurance company (see AIG, and Maiden Lane).

The same concept applies to Bitcoin. I suspect most users of Bitcoin are well aware of the risks, and probably don't feel the need to pay insurance premiums to "safeguard" their wealth. They have weighed the risks and costs of the banking system and made a choice.
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So we need strict regulations against the free market in selling risk and such. You seem to be wanting a lot of regulations and blocking certain kinds of activities between willing participants.

Or we just need to stop looking at regular mass collapses of the financial industry as a bad thing.
 
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ponderingturtle said:
You are certainly presenting it as a if it was negative, not a benefit.
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The need for such measures is certainly not a benefit. It's just that under the existing system, there is no other choice.

The Chicago Plan which was mooted by prominent economists in the 1930s would have made deposit insurance unnecessary. However, the banks didn't agree with the plan.

ponderingturtle said:
Just like at the start of the great depression it was on the .depositor individual to make sure his bank was solvent. cash was secure.
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ftfy. (It's amazing how few posters here can tell the difference between a bitcoin and a bitcoin exchange).

Checking accounts were predominently used by businesses rather than individuals in those days.
 
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ponderingturtle said:
So we need strict regulations against the free market in selling risk and such. You seem to be wanting a lot of regulations and blocking certain kinds of activities between willing participants.
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I am not a willing participant. Nowhere did I sign up to subsidize the FDIC, either through bank premiums, or, in a worst case scenario, public bailouts. So I'm not quite sure what fantasy "free market" you're talking about.

Or we just need to stop looking at regular mass collapses of the financial industry as a bad thing.
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Or, we should reform the monetary and banking system such that the public isn't perpetually held hostage by banker criminals.
 
Tippit said:
I can't speak for anyone else, but I certainly view FDIC as a negative, as I do insurance in general. This is due to the concept of moral hazard. FDIC removes the responsibility of depositors to engage in due diligence with respect to bank selection, at a greatly increased cost of banking in general, as well as placing the burden of socializing bank losses on savers, and taxpayers. I would much rather that depositors had to choose their banks wisely, and that I don't have to pay for their mistakes.
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We all would rather not pay for each other's mistakes, but as a society, we're all in it together, and none of us live mistake-free lives. Is it a mistake to drive when you're tired? Probably, but that doesn't mean we should let you die if you fall asleep, roll your car, and end up seriously hurt. It's also a mistake to get drunk, wander off into the woods, and get lost. That doesn't mean we don't look for you.

As long as we're going to help each other out, the question is: does it benefit society for people to have somewhere to put their money in a guaranteed safe place? Obviously, we agreed it was. Yes, it costs a bit more, but the alternative of losing all you money in a bank that seemed like a good bank was unacceptable. No matter how much diligence you do, you can't be certain a bank won't fail (and take you down with it).
 
Tippit said:
I am not a willing participant. Nowhere did I sign up to subsidize the FDIC, either through bank premiums, or, in a worst case scenario, public bailouts. So I'm not quite sure what fantasy "free market" you're talking about.



Or, we should reform the monetary and banking system such that the public isn't perpetually held hostage by banker criminals.
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By virtue of being born here, and opting to stay here, you signed up for the FDIC, and the income tax, and free and appropriate public education, and subsidized college for veterans, and a million other things.

If you're not a "willing participant", move to an economy that doesn't have depositor's insurance. That rules out North America, Europe, and most of Asia. Maybe there's a nice bank in Vietnam?
 
Fudbucker said:
By virtue of being born here, and opting to stay here, you signed up for the FDIC, and the income tax, and free and appropriate public education, and subsidized college for veterans, and a million other things.

If you're not a "willing participant", move to an economy that doesn't have depositor's insurance. That rules out North America, Europe, and most of Asia. Maybe there's a nice bank in Vietnam?
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Or keep your money in cash and in unsecured investments.
 
ponderingturtle said:
Clearly by Cash I mean gold.
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I'm tempted to make a comment about the long-term value of gold, but I suppose that's a subject which deserves a thread all of its own.

So I'll forestall the derail and just mention that I see gold more as falling into the category of unsecured investment rather than as cash.

(Although, if you have insurance against it being stolen, I guess that'd make it a secured investment.)
 
Brian-M said:
I'm tempted to make a comment about the long-term value of gold, but I suppose that's a subject which deserves a thread all of its own.

So I'll forestall the derail and just mention that I see gold more as falling into the category of unsecured investment rather than as cash.

(Although, if you have insurance against it being stolen, I guess that'd make it a secured investment.)
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I am not actually advocating this as a good idea, just a functional way of avoiding having insurance you are ethically opposed to.
 
psionl0 said:
I take it that this is totally out of the question?
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Removing deposit insurance isn't a reform that seems to be terribly popular to push by any political party. Removing most regulatory control of banks seems far more popular.
 
I'm all for deposit insurance. Seems a really good idea, to me.

About BTC, I wandered into Poloniex, one of the cryptocurrency exchanges. Everything is traded relative to BTC, and there are no "real" currencies: it's all crypto. This seems to free them from any worrying about money-laundering laws, and it's really easy to set up an account.

Their trade fee is 0.2% per trade. I get this feeling there are people wandering around the corridors of the altcoins looking to score cheap ones and change them over to BTC if their prices rises. With that low a trading cost, I think it would attract a certain kind of investor, including program-trading.

The market is always open, and there are lots of cryptos traded there. Around 50, I would guess.

Not really relevant to anything, I guess, but I found it interesting nonetheless. Was tempted to exchange some of my DOGE to buy some DRK as it seems to be rising. :)
 
Fudbucker said:
If you're not a "willing participant", move to an economy that doesn't have depositor's insurance. That rules out North America, Europe, and most of Asia. Maybe there's a nice bank in Vietnam?
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ponderingturtle said:
Or keep your money in cash and in unsecured investments.
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Brian-M said:
Although, keeping your money in cash means you're losing money in real terms because its value is constantly being eroded by inflation.
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Well, to be fair about it, given that my bank is now offering an interest rate of one/one-hundredth of one percent on savings accounts, FDIC banks are not that great of a hedge against inflation.
 
Tippit said:
Given that, plus this: New G20 Financial Rules: Cyprus-style Bail-ins to Confiscate Bank Deposits and Pension Funds

It's making less and less sense to keep your money in a bank.
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Contrary to all the propaganda and rhetoric coming from the mainstream media regarding a global economic recovery, the world is now facing the consequences of a currency war that began in the middle of 2013, and has forced central banks to print money at historic rates. And while equity markets around the world belay this assertion of economic difficulties, the bond markets and the banking systems themselves are now showing proof of a coming crisis, and besides this new occurrence of a bail-in in Austria, even the United States is once again talking about the confiscation or nationalization of private retirement accounts as a means to protect their own banks from a liquidity crisis that is right over the horizon.
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That is extremely unnerving, and yes, finding alternate means to store wealth seems like more promising notion
 
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