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171 sats \ 6 replies \ @denlillaapan OP 17 Dec \ parent \ on: Banks and Strategy... Because That's What Strategy Is (Bloomberg, Matt Levine) econ
why is it that banks couldn't do the same?
they can, and they could. History -- by which I basically mean pre-regulation banking in the 18th and 19th century -- have plenty of banks figuring out the right level. (Scotland being the go-to example for all manner of innovative banking practices, including reserve management).
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102 sats \ 3 replies \ @Undisciplined 17 Dec
One of the differences, though, is that floods can't decide to happen when they notice that you're vulnerable to a flood: i.e. bankruns aren't exogenous events.
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171 sats \ 2 replies \ @SimpleStacker 17 Dec
floods can't decide to happen when they notice that you're vulnerable to a flood
But places more vulnerable to flood have historically have had more flood damage! Clearly the floods are strategic about how they come about.
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0 sats \ 1 reply \ @Scoresby 17 Dec
Ah, that makes sense.
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0 sats \ 0 replies \ @SimpleStacker 17 Dec
Quod erat demonstrandum
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33 sats \ 1 reply \ @Scoresby 17 Dec
So then where did the idea that banks have particularly risky funding come from that Levine can make such a statement in his very-popular newsletter as if it is a well-known fact?
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102 sats \ 0 replies \ @denlillaapan OP 17 Dec
Feature of the fiat world // he never studied banking history past the 20th C...?
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