petermccormack (npub14mc…frlx)
When Peter interviewed the fed guy Joseph Wang he asked why we need the Fed.
Wang’s answer was: before the Fed there were market crashes and the private sector would have to step in. You don’t want to always have to rely on the private sector, you need public insurance. (He didn’t say this in so many words, but this was the gist of his response). Thus allowing the fractional reserve banking to continue.
If Tesla cannot survive as a business without government subsidies, it’s not a viable business model.
If a bank fails because they took the reserve fraction too low and couldn’t pay their debtors they should go out of business, not have their losses socialized.
If a bunch of banks fail simultaneously then the *system* needs to change, not have *all* the losses socialized.
If you socialize the losses then banks are *incentivized* to take greater risks. It’s a perverse incentive.
pailakapo
npub17cw…alhd
2023-10-10 18:14:26
Author Public Key
npub17cwgazyy9ahc0fu2cslql8w5csxg77zramt9rzel09yvxvrjk2eqntalhdPublished at
2023-10-10 18:14:26Event JSON
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"content": "nostr:npub14mcddvsjsflnhgw7vxykz0ndfqj0rq04v7cjq5nnc95ftld0pv3shcfrlx \nWhen Peter interviewed the fed guy Joseph Wang he asked why we need the Fed.\nWang’s answer was: before the Fed there were market crashes and the private sector would have to step in. You don’t want to always have to rely on the private sector, you need public insurance. (He didn’t say this in so many words, but this was the gist of his response). Thus allowing the fractional reserve banking to continue.\n\nIf Tesla cannot survive as a business without government subsidies, it’s not a viable business model.\n\nIf a bank fails because they took the reserve fraction too low and couldn’t pay their debtors they should go out of business, not have their losses socialized.\n\nIf a bunch of banks fail simultaneously then the *system* needs to change, not have *all* the losses socialized.\n\nIf you socialize the losses then banks are *incentivized* to take greater risks. It’s a perverse incentive.",
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