That's just a waste of capital and leads to zero business investments. It's exactly what happens in crypto because it's deflationary, and it's the main reason there is no crypto economy beyond the price speculation.
Yes, this is essentially correct. Every few months the idea of narrow banking is re-discovered and presented as a magic cure-all.
What played out over the past week was all fine. The FDIC and Treasury worked.
The contagion was the VCs freaking everyone out. It was a bad week for “leaders in tech” fomenting FUD when they could have been calming the situation down.
SVB had safe assets. They mismanaged interest risk. The government stepped in. It’s fine.
No it just increases the hurdle rate for valuable investments. It just means that entrepreneurs have to prove that their ideas are worth more than the security of knowing your money is safe. Is that so bad??
If you expect individuals to evaluate investments, then you're nuts - but if you're saying that the bank should do it for them, then you're suggesting the same system that already exists.
What played out over the past week was all fine. The FDIC and Treasury worked.
The contagion was the VCs freaking everyone out. It was a bad week for “leaders in tech” fomenting FUD when they could have been calming the situation down.
SVB had safe assets. They mismanaged interest risk. The government stepped in. It’s fine.
Thank god for centralized financial systems.