Bank Run at Silicon Valley Bank

Re:Bank Run at Silicon Valley Bank by jongjong on Thursday March 09, 2023 @06:17PM (#35088243)

Why does a business need a loan? They can just sell shares/equity to raise funds. It's better in every way; there's skin in the game. Why would anyone even want to loan money to a startups? If the startup founders go out of business and flee the country, the lender loses everything. The downside is unlimited. Yet if the startup does well and it becomes a billion dollar company, the lender will get maybe 20% return on their loan; the upside is limited. There is a reason why independent people invest their money in startups as opposed to loaning them money... It's only banks and big institutions which loan money to private equity to go towards startups; and it's never their own money... It's typically the public's money (as bank loans represent newly printed credit which dilutes the value of citizens' currency). Nobody in their right mind would loan their own cash to a startup at sub-8% annual ROI when inflation is 8%+... In the best possible case, you end up with the same amount of buying power as you started with; in the worst case, you lose everything.

As for car loans and home loans... Similar thing. If people couldn't get loans for houses, real estate prices would have to come down to an affordable level that people could save for. If people couldn't get a loan for a car which they need as part of their small business, they could sell equity in their business to raise money for the car.

The question above are circular. How would people get loans if loans didn't exist? They wouldn't, we don't need them and society would be better off.

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Re:Bank Run at Silicon Valley Bank by s1artibartfast on Thursday March 09, 2023 @06:27PM (#35088354)

I think that's a possible answer worth discussing , but nothing precludes that now. There's a reason why people don't crowdsource shares in their house when they want to buy it or if they're business when they create it. Sometimes they would rather pay the interest than share their asset. Sometimes there is a lack of Interest in people wanting a steak

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Re:Bank Run at Silicon Valley Bank by chollida1 on Thursday March 09, 2023 @06:46PM (#35088516)

Well before mortgages home ownership was about 2% and we had a very small number of people who owned all the real estate because people couldn’t afford it without a loan.

If your happy with going back to this that is your perogative but I would Be against your world view.

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Re:Bank Run at Silicon Valley Bank by jongjong on Thursday March 09, 2023 @06:52PM (#35088568)

A house would only cost around 5 years' worth of the median salary. Now it's like 15 years and that doesn't even account for the fact that taxes are way higher today and so it's much harder to save... With modern tech, things should be a lot better but for most people, it's worse, much worse.

Salaries have not being keeping up with productivity gains as the economy has become anti-competitive by design. Every time money changes hands, it gets taxed maybe 30% on average... By the time $100 has changed hands 10 times, there is only $3 left out of it for the people (the rest went to the government). It centralizes everything around the government; money cannot flow too far from it. The modern economy is a giant social scheme with 0 merit. For many, it's hell on earth.

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Re:Bank Run at Silicon Valley Bank by oa335 on Thursday March 09, 2023 @07:57PM (#35089112)

Could you please share where you got that measure of “2% home ownership” before mortgages?

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Re:Bank Run at Silicon Valley Bank by sanderjd on Thursday March 09, 2023 @06:56PM (#35088597)

These would be good questions to ask an undergraduate microeconomics professor. They have answers. It's not that nobody has ever thought about this before.

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Re:Bank Run at Silicon Valley Bank by jongjong on Thursday March 09, 2023 @07:05PM (#35088678)

I know the answer; it's because being able to issue unlimited money, diluting the public's savings and salaries and then collecting interest on it benefits certain powerful people in a risk-free manner. That's not the answer which an economics professor would give me though. They are not trained to use their analysis skills so much as providing canned explanations. These economics professors have to pay their bills too and their paychecks come from the people earning interest on the big loans... The paychecks of economists literally come from this system that they're suppose to analyze in an unbiased way. Not going to happen.

Damn it can someone please just give me free money so I don't have to participate in this system and don't have to think about it every day? Maybe if I could also benefit from it without having to work, it would be easier to just let it be. It's exhausting to get screwed every day and knowing exactly how I'm being screwed and yet having no power to do anything about it except whining online to random people hoping desperately that the system will improve just enough that I can get the tiniest opportunity. I've been working on side hustles for 10 years straight but I've never had the social connections to get traction regardless of how good the product is or how much users love it.

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Re:Bank Run at Silicon Valley Bank by sanderjd on Thursday March 09, 2023 @07:21PM (#35088826)

This is a very good Dunning-Kruger effect example. You aren't being screwed, you are swimming in water you can't see.

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Re:Bank Run at Silicon Valley Bank by jongjong on Thursday March 09, 2023 @07:27PM (#35088889)

It's not about information. It's about social connections; that's how you get opportunities. Information and intelligence is worthless and a pretext.

If I befriend Elon Musk and he makes one tweet about any of my existing projects, I'll be a millionaire within a year. 100% guaranteed. I wouldn't have to change anything or know anything more. Then I would have impostor syndrome instead.

It's easy to claim that anyone who receives help and has it easy 'suffers' from impostor syndrome and anyone who doesn't receive any help suffers from Dunning-Kruger effect. I know how this works. Only those who really struggled can see all sides; that's because nobody tries to hide anything from you; there is no incentive to.

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Re:Bank Run at Silicon Valley Bank by sanderjd on Thursday March 09, 2023 @08:32PM (#35089344)

You're wrong about whether fractional reserve banking is broadly good for people living in developed economies - it is - but you're unlikely to be talked out of this conspiracy kick you're on, so :shrug:. All the best to you!

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Re:Bank Run at Silicon Valley Bank by jongjong on Thursday March 09, 2023 @09:53PM (#35089878)

Well it's not good for me and I'm merely a typical product of this system. The system will make plenty more of me. I was totally alone a few years ago, now I look like a moderate. Unfortunately, future contrarians may not be as curious, tolerant and understanding as me so they will probably end up blaming capitalism as a whole and demand communism... China will swoop in and 'liberate' the people. When this happen, I will be shrugging my shoulders in complete apathy due to moral exhaustion.

If intelligent people cannot separate the monetary system from capitalism, the average person won't either.

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Re:Bank Run at Silicon Valley Bank by sanderjd on Thursday March 09, 2023 @11:14PM (#35090289)

It is good for you. The fact that there is a thriving economy, that there are lots of businesses to work for, that you can start a business if you want to and get money from a bank to do so, this is all very good for you.

But sure, keep wishing we could go back to feudalism or whatever, great plan!

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