[pjbyrne]

It's called an analogy. I analogized the Bitcoin markets to a fractional reserve system, as the dollar value of Bitcoins in the Bitcoin market far exceeds the amount of dollars that have been spent chasing after them. The system is accordingly very vulnerable to liquidity shocks.

Re: liquidity facilities, I know for a fact certain exchanges have liquidity facilities from banks that they draw down in times of increased withdrawal demand. If market conditions deteriorate quickly enough those facilities will be withdrawn, which could result in the exchange getting caught with its pants down with a large, dollar-denominated obligation to its banks and no means to get the dollars to repay it. That is the stuff of which insolvency is made.

[panarky]

Repeating your misunderstandings doesn't make them less wrong.

But thanks for summarizing your thinking for those who didn't click through to the source.