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Silicon Valley Bank Collapses
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bdunham7:

--- Quote from: TimFox on March 20, 2023, 03:11:19 am ---The alternative to fractional reserve banking is keeping ones money under a mattress.
The required fraction to hold as reserves is a matter of regulation.

--- End quote ---

There are reasonable alternatives and during the GFC they came a bit closer to a decent solution, but abandoned it.  Put simply, you can define 'deposits' as money in the bank that can be demanded at any time and 'investments' as money loaned to the bank for them to earn a return and share some with the customer.  Deposits can and should be fully guaranteed without limit and that probably means little or no interest, perhaps even bank fees.  The program I'm referring to was the temporary unlimited guarantee on non-interest transactional accounts.  Interest-bearing investments, such as CDs and savings accounts over some limit ($250K is good enough) would not be guaranteed.  So the customer would have an informed choice about how to store their assets.  Banks could offer services such as distribution of deposits among insured institutions (CDARS as it is currently known) or money market and treasury options. 

bdunham7:

--- Quote from: tooki on March 19, 2023, 09:10:52 pm ---The deal went down while I was at a pub quiz with friends. My route home has me change trams at Paradeplatz. That’s me just now, with the Credit Suisse headquarters behind my left shoulder and UBS headquarters over my right. :P

--- End quote ---

Maybe they can put one of those glass bridges between the buildings now.  Although I suspect that UBS will be consolidating pretty severely and quickly, so there might be some prime real estate available by next year.
tooki:

--- Quote from: bdunham7 on March 20, 2023, 03:42:15 am ---
--- Quote from: tooki on March 19, 2023, 09:10:52 pm ---The deal went down while I was at a pub quiz with friends. My route home has me change trams at Paradeplatz. That’s me just now, with the Credit Suisse headquarters behind my left shoulder and UBS headquarters over my right. :P

--- End quote ---

Maybe they can put one of those glass bridges between the buildings now.  Although I suspect that UBS will be consolidating pretty severely and quickly, so there might be some prime real estate available by next year.


--- End quote ---
Rumor has it that “the banks” have vaults under Paradeplatz with lots of gold and whatnot; maybe they could just join up underground!  ;D

Jokes aside, if they do merge the real estate, I hope they keep the CS building, built in 1877. It’s so much better looking than the UBS building from 1960.

Beyond that, I don’t have any stake in the matter, since I don’t bank with either one of them, nor own shares. I do have a bit of schadenfreude, though: investment banking is kind of a scourge IMHO. Living in Zurich you encounter investment bankers now and then, and they’re just the worst kind of people.
jonpaul:
With todays continuing contagion to AT1 tier bonds and  USA First Republic, my notes are even more relevant.

1/ Since The inception of Fractional Reserve banking by English financier John LAW in 1715, at the Bank of France, (plaque still exists at the Bourse, in Parois!) he has initiated 250 years of chaos.
The US Founding Fathers knew the dangers and impact of political manipulation of currencies by the British overlords, Kind Henry etc.
Thus the unit of account of the United States was defined as a Dollar, a Spanish milled gold coin at the time.

2/ The  US Constitution Art 1 sec 10 Clause 1   
"No State shall ........ coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; ......."
Art 1 sec 10 clause 1 has not been repealed nor affected by any amendements.

3/ Since its illegal inception in 1913 by 5 New York banks the US So called Federal Reserve have debased the US unit of account by 98%.

4/ References:

 The Creature from Jekyll Island: A Second Look at the Federal Reserve
https://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/091298645X/
 
Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution
by Edwin Vieira Jr.

https://www.amazon.com/Pieces-Eight-Disabilities-Constitution-Foundation/dp/0967175917/

Have an ABSOLUTELY FANTASTIC day!
Jon
Marco:

--- Quote from: jonpaul on March 20, 2023, 11:24:47 am ---The US Founding Fathers knew the dangers and impact of political manipulation of currencies by the British overlords, Kind Henry etc.

--- End quote ---

Private transactions are more than sufficient to allow fractional banking to persist though. Unless government intervenes, people are suckers for interest on "demand" deposits ... not all the bank runs in the world could kill fractional reserves.

Full reserve banking can only happen by the barrels of government guns forcing it on people.
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