I don't support letting people get hurt to make a point about fractional reserve banking or bitcoin.
Discussion
People get hurt either way. It's a pick your poison type of situation.
But you're right, this won't play well here.
Yes. Because many would like to see the world burn so they can feel vindicated. I support Bitcoin, but I also believe in real world we have to accept things for what they are, and improve things through incremental change. Not burn-it-all-down revolutions with ridiculous fantasies of building utopia from the ashes.
I don't think it's a "burn it all down" mentality as much as it is a "let the market play out without government intervention" mentality. I don't want to see people get burned, but I also don't want the governmemt to subsidize risky behavior on the part of banks.
FRB hasn't engaged in any specifically risky behavior. There are many institutions that are worse capitalized than them. The only reason they're facing a run on the bank is due to market psychology. This is a tragedy of the commons problem.
I get it, but this issue is baked into the bread of a fractional reserve system. You can't really blame human psychology for... well, the actions of humans. It's a bit of a prisoner's dilemma type of situation, no?
I genuinely hope things work out, as I agree a slow transition is required or else we'll have loads of pain as a society, but I believe the entire financial system is broken and further breaking.
There is nothing particularly new happening right here. That’s just a narrative coming from people who take moral and ethical stances on the immorality of fractional reserve banking. 100% of banks in the Western world would collapse if they had a run on them. This isn’t a mystery. Everyone understands this. Both people who are pro-FRB and anti-FRB. It’s not like some mind-blowing wisdom.
Banks take deposits and they make loans or buy assets with those deposits. That’s what they do. There’s nothing new about that. The same was true when we were on the gold standard. And honestly, I have made the argument that even in a hyperbitcoinized world, that would STILL be true.
I think the argument that bitcoin will bring an end to fraction reserve models — which are fundamentally about adjusting time preference to maximize capital efficiency — will continue to happen!
I think the main difference would be that people would understand that loaning your money to a bank carries a certain amount of risk vs. the alternative of self custody. That has been completely ignored in our modern society and it's just the standard to leave all your cash in the custody of a bank. Lending money means risk. Period.
This is a completely anodyne point. I don’t know anybody of average intelligence that doesn’t understand that there is some form of risk in the banking system connected to how banks make loans or invest in assets. You don’t think the people who lived through the 2008 Financial Crisis understand that?
You clearly don't. Because you're arguing that everyone should get bailed out. So you're entirely erasing the risk.
I am arguing for the FDIC to address an irrational market psychology before it turns into systemic risk, yes. And I don’t think it would cost taxpayers or anyone a dime to stop it. Because FRB *has* enough assets to cover liabilities. The issue is going to be a duration/maturity mis-match. I am really bored of the conversation about the immorality of that system, though. I get it. And I don’t need anyone to recommend the “Mystery of Banking” by Murray Rothbard to me to get people’s point. Not that you are. But I’m sure someone will. Which I’ve already read.
I wouldn't be so sure! At least that's not the perception I have from the majority of people!
You’ve conducted a survey and found a majority of people think banks have “zero risk”?
And part of this is the amount of reserves that banks hold. I'm not going to claim I know anything about the reserves of FR, but many banks have a tiny fraction of their liabilities on hand. Because the more you lend out, the higher the potential profit, but also the greater risk. Again, the risk is inherent in the lending. Depositors SHOULD understand this risk.
People will get hurt and got hurt way too long already. Death by a thousand cuts is not preferable to doing whatever it needs to stop the cutting.
I have no respect for the "burn it all down" argument. None.
Doesn’t matter if you “respect it” or not. Now that bitcoin exists, eventually the legacy system will all be “burnt down.” The question is mostly about rate of the transition.
Before … with no bitcoin as an alternative … the pace was likely slower.
All systems will eventually fail. That’s true of everything. And probably bitcoin on a long enough timescale. But in the here and now, nearly 100% of society is dependent on the current system, and that system has to be managed in place. I’m working on trying to build a better system. But I am not, like a crazy person, wishing for that system’s imminent collapse, which will impose untold suffering on regular people.
There are consequences for decisions made. Accountability sucks for those who avoid it. We should have been demanding more from our leaders for a long time. Unfortunately, complacency and indifference and ignorance have prevailed for the last several decades.
Eventually the bill comes due.
Doesn’t mean I’m “rooting for failure.” Mostly acknowledging that it is drawing nearer and people should be prepared.
Was there ever a time in history where we had great levels of accountability?
“Power corrupts. Absolute power corrupts absolutely.”
Adam and Eve had one rule
At the scale we’re about to see? Only as a positive feedback loop (at the end of reigns) … cool thing about this one is that a geographically oriented civilization can choose to transition into the next system and potentially save itself from its past missteps. Clearly it will not be a one-to-one transition (there will be winners and losers) but Western society might choose to redeem itself from the old system. Shouldn’t we advocate for as many Western winners as possible in the next year while fiat ends its end and #bitcoin approaches its halving?
Do you not believe that the accountability for Western civilization is coming? Do you think there a way to avoid it?
That didn't really answer my question. It begged a question, though.
In the garden perhaps- if you consider that history?
I don't disagree with you here. As much as I want to rage against the bureaucracy as the next person, these a real human lives being impacted.
As long as mommy and daddy keep fixing things, the lessons will not be learned and will continue repeating.
When you get in a way of natural efficiency mechanisms you are only delaying and amplifying the pain of the future.
What is particularly risky about FRB's balance sheet that set it apart from literally 100% of all other banks in the US? Other than the fact their customers are in a coordinated panic based on some rumors they read on the internet that we're amplified by SVB's collapse?
It’s always do gooders who destroy a civilisation
We have this wonderful evolutionary mechanism called natural selection. It’s efficient and does what needs to be done, eliminates the mistakes and gets better over time. Things work out in the long run. But no, here comes human with interventions and “protections”, disrupting what has worked for billions of years, thinking we know better.
Surprise mothafucka, we don’t. Get out of the way and let nature do it’s thing. Things must fail if the whole is to improve.
"burn it all down" is the wrong analogy. It's not about bringing destruction to an otherwise fine situation.
It's one destruction vs. another destruction. It's like the trolley dilemma with the trolley about to run over 1 person and you can flip the switch to run over 2 but later. Do you really bring destruction by flipping the switch?
Also it's about all the people all the time suffering from fiat money! Fiat money is the culprit why we are working more hours than our fathers and can afford less than they could. Technological progress is supposed to work the other way around!
Yes, if bank runs rip through society suddenly, it will be really bad for many people and I don't cheer for that neither but I do hope there will be more banks failing in the near future.
Let there be a slightly bigger financial crisis than the last one so more people prepare for what's coming.
People losing their life savings is tragic but as long as it's not all the banks all at once, I have no doubt there will be ways to avoid the worst.
Yes, some will get hit harder than others and FDIC insurance at least in theory should protect the poorest account holders.
It’s not true that we are working more hours to afford the same things as our parents, though. When you look at people’s buying power from the perspective of prices of things, at the average industrial wage, the average person only works about 20 minutes per day to pay for the daily food intake. In the 1950s, it was about 3 hours.
Some things are more expensive, like real estate. But I would strongly argue that land-use policy and anti-development policies at the local level have artificially restricted the ability to build housing and play an outsized role.
Here’s a video by a libertarian, Austrian economist, who disagrees with you: https://www.youtube.com/watch?v=W8SLIt7xZxU
For poor people, housing, education and health care are very significant items on their shopping list. To skip those is to cut corners.
Education and health care certainly got more expensive because of political decisions that are not directly related to inflation but housing getting more expensive is a direct result of fiat not being a good store of wealth. Real estate has a speculative premium it wouldn't otherwise have.
So the car is better than 100 years ago? Yeah, but the industrial processes to produce cars are 1000 times more efficient than 100 years ago. It's ridiculous to pretend that a car costing about as much as 100 years ago is ok.
Even the chicken example: How many people were involved raising 1000 chicken 100 years ago compared to today? The author of your video celebrates an x11 improvement where it should be x100.
That’s not what you said though. You said people were working more hours to get less. And it’s not clear to me it’s believable that the whole world could be literally 100 times wealthier than we are right now.
It's hard to compare if we get less for our work or not as you can't compare a smartphone or a cure for a disease with not having those back then but I find the question very valid how can it be that 120 years after the very invention of automation (conveyor belt) most of us still have to labor most of our waking hours in order to support a family?
Average hours worked is also not up. Where are you getting your information from when you say things? 
Maybe that's women entering the work force? While the prior generation mostly had single providers, more and more women entering the work force often part time resulted in statistical work hour reductions as in your chart.
https://www.epi.org/publication/webfeatures_snapshots_07072004/
I would just suggest you're working really hard to engage in narrative-fitting, here.
Well, I did ask myself this question since early in school: If GDP grows some percent per year since 100 years, why is it most of us still have to spend most of our time working? Are we really 100 times better off today? Why can't I just work 5h/week and be 20 times better off than back then?