Following seeing Lyn’s write-up yesterday, I you should not see how individuals will not see the inherit hazard of the fiat technique as a entire.
Fiat depositors are pretty much compelled to just take on pitfalls so that bankers can revenue from the depositors (also named creditors to the financial institutions in several of these current lawsuits).
The overall procedure is a joke.
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Comments (9)
Feels so good to have a community that is on the same page as you about such globally relevant topics.😎
Thus, my retirement savings are in Bitcoin.
Love me some Lyn Alden. If y’all haven’t subscribed to her newsletter – do it. It’s the best newsletter in finance/macro.
lyn alden= best financial blogger . worth subscribing to.
For those who dont want to read into it, the narrow bank (TNB) would take your money, park it at the Fed where it would accrue 2.4% interest and take a small cut of it. parking money at the Fed is available to all banks. the fed said that it would not open an account for TNB, got sued, and was forced to admit that it would be dangerous for the system as it would
Excerpts from the bloomberg article [https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank](https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank)
“The first is macroeconomic: The Fed worries that narrow banks could mess with the implementation of monetary policy, because if they succeed they will keep a lot of money at the Fed, increasing the size of its balance sheet. They might also make other short-term interest rates (like fed funds) more volatile, because people who would otherwise participate in those markets might park their money at narrow banks instead, making it harder for the Fed to target interest rates.”
and the big admission: “Second, it worries that narrow banks will take funding away from regular banks, making it harder for those banks to trade stocks and bonds (a business largely funded by repo), and maybe even making it harder to make loans”
link to the Fed statement: [https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190306a.htm](https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190306a.htm)
and a quote(pass-through-entities means the narrow bank) “As set forth in the advance notice of proposed rulemaking, these narrowly focused depository institutions (“Pass‑Through Investment Entities” or “PTIEs”) could attract a very large quantity of deposits from institutional investors, yet at the same time avoid the costs borne by other depository institutions, such as the costs of capital requirements and the other elements of federal regulation and supervision, because of the limited scope of their product offerings and asset types. The advance notice of proposed rulemaking requests comment on the potential benefits and potential costs associated with the presence of such institutions in the U.S. financial system and their receipt of IOER on their balances at a Reserve Bank.”
Bitcoin forever
Does anyone really believe a small group of humans are smart enough to steer an economy as large and complex as the US? The masses will always find a way to exploit the flaws in a system of perverse incentives. The only way to escape the abuse is to opt into a parallel economy that is not based on trust and incentivizes fiscal responsibility.
It’s worse than a joke; it’s highway robbery.
It brings to mind that old Henry Ford quote: “It is perhaps well enough that the people of the nation do not know or understand our banking and monetary system, for if they did I believethere would be a revolution before tomorrow morning.”
“free market”
clown world 🤡