Bank Run Watch 2023 after Silicon Valley Bank shutdown - Over 97% of SVB's assets were not FDIC insured

[Spasticus Autisticus]

What the bankers learned in 2008 is that if you make risky bets with a large enough pile of money, the US federal government will backstop your losses, ensure you can pay out your executive bonuses, and keep your depositors whole. You can even fabricate documents and break a raft of laws, and as long as you bribe the right politicians, you won't even get in trouble. It's the entire rest of the world that will get fucked, not you, personally. I guess 2023 is when we test whether or not that was a one-off or a permanent rule (it's a permanent rule).

By 2008 the moral hazard was already established. It was 10 years earlier when Long Term Capital Management collapsed that the lesson was learned. tl;dr a bunch of MIT niggers started a hedge fund using a mathematical model to find "optimal" bond price spreads. The model worked extremely well until Russia defaulted, blowing up the fund's positions, causing them to owe billions of dollars to the banks that loaned them money. The Fed bailed out the creditor banks to stop contagion.

 

[CaptainAutism69]

Feds buying long term bonds at face value just is a bailout.

It's not prinitng money though, it's more like paying back a loan early.

 

[reptile baht spaniard rid]

It's not prinitng money though, it's more like paying back a loan early.

They’re borrowing at 4-5% to pay back a 2-3% bond. If they’re not printing they’re getting it from SOMEWHERE

 

[Meat Target]

By 2008 the moral hazard was already established. It was 10 years earlier when Long Term Capital Management collapsed that the lesson was learned. tl;dr a bunch of MIT niggers started a hedge fund using a mathematical model to find "optimal" bond price spreads. The model worked extremely well until Russia defaulted, blowing up the fund's positions, causing them to owe billions of dollars to the banks that loaned them money. The Fed bailed out the creditor banks to stop contagion.

Reminds me of how Credit Default Swaps (which turned out to be financial WMDs) were designed by eggheads using computer models in an attempt to abra-cadabra the risk away from bad loans.

 

[Some Dumb Faggot]

How much time does all this fuckery even buy them? Shit will completely bust apart at the seams by mid-summer even with this "fix".

 

[Meat Target]

If you want a banking system that doesn't have these types of problems, your primary alternatives are full reserve banking which both makes access to credit like mortgages or business loans much more difficult and requires charging depositors instead of offering interest. Islamic Banking is also an option but it has both way higher risk and lower reward.

I mean, the genie's never going back in the bottle now, unless everything goes to shit and the new builder of the economy is Lord Humungus. The best we can hope for now is always hoping the system can stay afloat for a few more years at a time.

 

[mindlessobserver]

How much time does all this fuckery even buy them? Shit will completely bust apart at the seams by mid-summer even with this "fix".

Enough time to come up with another hair brained scheme to buy more time. As usual. They hope.

 

[Ancient Pioneer]

fiat currency in itself isn't the issue

But it is, every single time fiat currency has been tried it fails. The point of paper dollars is to be a substitute for metal based currency which is heavy to carry around in large quanity. Every time paper currency comes up the government moves from gold or silver backed paper currency to nothing at all because they quickly create more paper than they have gold and cannot furnish enough for convertibility. The fiat floats on its own for an indeterminate amount of time before inflating into uselessness. This has been a reoccurring theme since paper currency was first attempted in China. The major players in the world have been pretty good at managing and delaying this cycle for their currencies during the 20th century and partly into the 21st century, but we can see the US starting to lose discipline in real time, and the addiction to debt is becoming a serious issue for all Western economy.

People can go "Harrumph the US Dollar is the world reserve currency" all they want, but the French strike on the US Dollar in the 1970s causing the collapse of gold convertibility and the Nixon Shock shows that foreign nations, and even "Allies" will gladly cut down the US at the drop of a hat just for shit and giggles. China negotiating a peace treaty with Iran and Saudi Arabia and closing out the Yemen War should be a very ominous portent for anyone expecting the US to remain top dog. The Saudi aren't interesting in being an exclusive vassal to the US imperial system any longer and the petrodollar should be viewed at threat now. Changes like this happen unexpectedly and have monumental consequences, losing the petrodollar peg for the US Dollar would be such a devastating event that it would accelerate inflation into Weimar tier within a year or two as A LOT of nations would immediately jettison the US Dollar in favor of their regional suzerain like Russia, China, India or maybe Brazil, Mexico or Chile.

 

[Male Idiot]

Fiat does suck, I'm just not happy with replacing it with crypto which manages somehow to be even shitter. Yeah I know how blockchains work. They eat up a shitton of power, are just simple code, and are backed by nothing but hype. And ruin video cards.

Even if Fiat was the only currency ever invented, it would still be better than crypto overall. But precious metal backed currency has been known to humans for long, and it works the best.

 

[LurkTrawl]

Changes like this happen unexpectedly and have monumental consequences, losing the petrodollar peg for the US Dollar would be such a devastating event that it would accelerate inflation into Weimar tier within a year or two as A LOT of nations would immediately jettison the US Dollar in favor of their regional suzerain like Russia, China, India or maybe Brazil, Mexico or Chile.

There's an entire cross-section of the populace that won't believe that's possible though, due to the logic of "it hasn't happened before, or yet, and would be disastrous so you can't say it's possible or you're an unhinged doomsayer", and you'll get plenty of shit just for pointing this out here I'm sure.

Fiat does suck, I'm just not happy with replacing it with crypto which manages somehow to be even shitter. Yeah I know how blockchains work. They eat up a shitton of power, are just simple code, and are backed by nothing but hype. And ruin video cards.

Explain then in detail how fiat is better when by rights it just runs on hopes, dreams, and bullshit shell-games.

 

[ZMOT]

Every time paper currency comes up the government moves from gold or silver backed paper currency to nothing at all because they quickly create more paper than they have gold and cannot furnish enough for convertibility.

"every time I grab a knife, I have to stab someone. this is clearly the knife's fault".

that's why fiat isn't the problem, how it's used is. anything can be abused, doesn't mean the thing itself is bad (and obviously you want to take measures to ensure it doesn't, but that's another topic).
a backed currency wouldn't solve any of it either, even if you only have a set amount (which comes with it's own problems too). any paper that says you "own" X amount of gold is in the end just a paper saying some stuff, not gold.

 

[Zbk3VmLfujjzjxBd43tL]

But it is, every single time fiat currency has been tried it fails. The point of paper dollars is to be a substitute for metal based currency which is heavy to carry around in large quanity. Every time paper currency comes up the government moves from gold or silver backed paper currency to nothing at all because they quickly create more paper than they have gold and cannot furnish enough for convertibility. The fiat floats on its own for an indeterminate amount of time before inflating into uselessness. This has been a reoccurring theme since paper currency was first attempted in China. The major players in the world have been pretty good at managing and delaying this cycle for their currencies during the 20th century and partly into the 21st century, but we can see the US starting to lose discipline in real time, and the addiction to debt is becoming a serious issue for all Western economy.

I don't see the problem with fiat currency since it permits the economy to expand without being tied to stocks of gold and silver. This is why China was so wealthy and powerful most of its history for instance, and this is why decoupling from gold and silver permitted such a huge economic expansion in the West.

The only way gold/silver standard would be a better option is if we had a consistent supply of it. We did for many centuries since 1500-1900 had Europeans loot/discover all the New World sources and then discover the South African/Australian sources. Like that's a huge part of why whites took over the world, because whites could expand the economy more efficiently than other regions because of American gold/silver. Today that's not possible because of the amount of gold/silver we'd need, so until we can cost-efficiently mine asteroids/the Moon or filter it out from seawater, gold/silver backed economy doesn't make sense.

What does make sense is not expanding the economy for expansion's sake, which is our current economic model that encourages this sort of irresponsible banking.

Fiat does suck, I'm just not happy with replacing it with crypto which manages somehow to be even shitter. Yeah I know how blockchains work. They eat up a shitton of power, are just simple code, and are backed by nothing but hype. And ruin video cards.

The energy consumption is arguably a good thing, because it gives bitcoin (and to a degree other crypto) an actual basis since it's converting watt/hours into a medium of exchange.

 

[CuzinEd]

Nigger, nobody cares what that idiot hippie thinks about this shit.

I am not asking about what he thinks retard. I am asking about what he said. He said that Barney franks came out and said that Signature was not insolvent and that the government took control of Signature because of crypto. I was asking if anyone could confirm what Barney Franks said was true.

Dude nobody has a reason to take you extra seriously because you said "I won't reveal my power level".

Especially since you used the fucking term wrong on top of being a newfag. Just write your opinion without some bullshit preface.

I get that it's hard to understand how crypto backed by blockchain works but can we please stop pretending it's somehow less legitimate than the USD?

I'd love for an explanation in detail on how that's qualitatively different than a bailout.

I don't think anyone said it's not a bailout. They aren't bailing out the people who owned the bank. They are bailing out the depositors. The people who owned the bank and the investors aren't getting the bailout.

 

[Meat Target]

@Save the Loli:

Any commodity backing currency, even if it's a basket of them, or even if it's something trivial like apples or toys or paper clips or TF2 hats, is better than currency being backed by vapor and wishful thinking.

 

[Lord of the Large Pants]

@Save the Loli:

Any commodity backing currency, even if it's a basket of them, or even if it's something trivial like apples or toys or paper clips or TF2 hats, is better than currency being backed by vapor and wishful thinking.

The US dollar is backed by the most precious metal of all: American lead.

 

[Kheapathic]

Even my speculator dumbass won't touch CS no matter what the price is, and I bought FRC at 20 this morning.

Okay, dude, dude, dude dude dude! I got a hot tip for you! Okay! As we all know e-sports are the hot thing. What if I told you, you can invest in one of the biggest names in e-sports?!






I'm fucking joking, don't do this, they're a fucking money sink and led by retards who don't know how to market/generate money.

 

[Zbk3VmLfujjzjxBd43tL]

@Save the Loli:

Any commodity backing currency, even if it's a basket of them, or even if it's something trivial like apples or toys or paper clips or TF2 hats, is better than currency being backed by vapor and wishful thinking.

There is no inherent advantage in commodity-based money because ultimately it all comes down to trust in the system. That's why, for instance, coins have reeded edges because before they did, people frequently shaved them and produced counterfeits (to say nothing about gilding lead to make counterfeits). Fiat currency, be it medieval China or modern American, is backed by faith in the system that it won't do something fucking stupid and break the system. Fiat currency works because it's a rough measure of the entire economy and can be expanded at the pace of the economy rather than commodity-based money which is prone to deflationary pressure that causes economic depressions (this happened MANY times in the 19th century and in the US was behind the bimetallism/silverback movement).

 

[Ancient Pioneer]

I don't see the problem with fiat currency since it permits the economy to expand without being tied to stocks of gold and silver.

I agree with this

What does make sense is not expanding the economy for expansion's sake, which is our current economic model that encourages this sort of irresponsible banking.

This is why fiat is flawed, the discipline always fails and printing the currency for almost every ill becomes normalized, leading to currency collapse. Its a well trodden path that is well understood, particularly for nations operating as imperial powers that continuously find themselves in crisis both military and economic. I don't want to sound like a gold tard or crypto maximalist but the flaws of fiat are well understood and expected.

 

[Elämällä on väliä]

I don't want to sound like a gold tard or crypto maximalist but the flaws of fiat are well understood and expected.

And they are still less important that flaws of two alternatives for fiat currency.

Gold based monetary system collapsed (multiple times) in something more harmfull than anything that happened to fiat currencies. Crypto is to fucking resource demanding to work as common currency. We need to stick with fiates for next few decades at least.

 

[mindlessobserver]

And they are still less important that flaws of two alternatives for fiat currency.

Gold based monetary system collapsed (multiple times) in something more harmfull than anything that happened to fiat currencies. Crypto is to fucking resource demanding to work as common currency. We need to stick with fiates for next few decades at least.

@attractive_pneumonia is not wrong though. The history of fiat has always led to total financial collapse. It's important to understand just what fiat is. Gold standard dollars were also a form of fiat. Just of a different kind to what we have now. Fiat is money issued as script rather then the physical object it ostensibly represents. Be it gold, or the faith and credit of the US taxpayers.

Since time immemorial, governments have attempted to game the system. The very first financial panic happened in the Bronze Age when it was discovered various kings were not adding enough tin to their alloy bars and then using the adulterated bronze to buy more grain and luxuries then they were ostensibly worth. Since then it's been an endless litany of gamesmanship. European monarchs debasing their coinage by making their gold coins weigh slightly less then advertised. Roman prelates plating copper coins with silver and trying to pawn them off on credulous morons. Chinese beaurocrats buying rice with paper scripts that ostensibly represented a value of silver but in truth were pure forgeries.

The only constant of financial history is that when it comes to money, it is inevitable that a government will debase it. And for awhile it works great. Right up until it doesn't. I think money is probably the one thing we should surrender to the AIs. Thousands of years of human history have shown the human species is incapable of managing it at a macro level.