there is a centralized bank that is the Federal reserve

and there is a decentralized bank which is Bitcoin

That's an interesting proposition, that was simply unfeasible from a practical perspective until very recently.

A consumer bank needed branches, and tills, and vaults, and all sorts of things to serve customers, so it was just unfeasible for most nation-states to eat the costs of all that - while private entities were incentivised to set all of that up so that they could raise money to invest for their own profit.

Now that money is increasingly a purely digital construct, a true National Bank could actually be feasible at low cost, providing a 100% safe deposit system for consumers that will never pay any interest. Private banks would likely still exist, they'd just provide more incentives to depositors (i.e. higher returns). This would make private banks a bit less central to the whole system, and make society a bit more fault-tolerant in this area.

It's an interesting policy proposition, and maybe talking about it would be a bit more productive than the average thread on banks.

They could put the onus of control of the funds/account into the hands of the depositor and use a CBDC but trust in government is an issue here.

> Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

That sounds a lot like some type of bailout to me. What does "make funding available" mean? Where does that funding come from? It's going directly to banks, not to depositors. How does that work?

The SVB depositors are going to turn around and put their money in a new bank.

Money isn’t erased during a bank run. It’s given back to the owners who always had a right to have it. Fractional reserve banking is what erases money.

I never said inflation was detrimental or harmful (my personal belief is that it is harmful, however), just that adding money to the supply is by definition monetary inflation (the origin of the concept of cost inflation which is what we’re being asked to accept as the true definition). Putting air into a balloon doesn’t mean it will pop; it’s still being inflated. Hey, it’s even more fun for a while ;-)

I was responding to a parent who said printing money isn’t inflation, when it’s the literal definition of, and the origin of the term in monetary theory. It’s not very constructive to conversation to attempt to change meaning of words to make one point or another.

My apologies for reading incorrectly. My comment is true only for price inflation.

M3 is erased during a bank run, because the multiplier from M1 to M3 caused by fractional reserves goes away.

And also we probably don’t want to say “haha silly SVB customers, they can wait ten years to get their money back” because none of us want to live in a world where most Americans, most of whom don’t understand all these complexities, start runs on ALL the banks because they think this is the start of a collapse. It becomes self-fulfilling at that point.

Man, it's probably time to jump ship from the US economy all together.

long term treasuries are extremely risky assets, by definition and move a lot on interest rates. whereas short term treasuries like less than three momths barely move on fed rates, hence much safer.

Svb bank made the wrong choice of holding super long duration treasuries. They knew what they were getting into, and did it anyway for higher yield at that time. they could have put the money in 3 month expirations and wouldnt have been in this situation.

I don't see how the US economy is to blame for the actions of a greedy monoculture based on "tech line go up". They made a long term bet on bonds with historically low interest rates, doubling down that the party would continue indefinitely. They didn't have a chief risk officer for 9 months! How is that the US economy's fault?

There's a reason they lobbied congress to weaken risk regulations.

I'm hoping people go to jail over this.

You’re correct in highlighting that if they fronted the cash now the bonds would be less, but it is simultaneously true that they will be worth less “2023 dollars” in 10 years.

We are currently working with 2023 dollars.

E.g: Fiat over $500k in a single institution is likely not earning as much as it could and runs the risk of loss of access to funds for X amount of time if the bank fails, until reimbursement happens. But $100k each in 2 different banks leaves you with $300k to invest however you see fit and still have enough liquidity to move quickly on opportunities.