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Pro tip: the deposits in your bank account are not backed by actual money 1-to-1
by o_p 5y ago
Pro tip: the deposits in your bank account are not backed by actual money 1-to-1
- taneq 5y agoPro tip: Modern finance is also a Ponzi scheme.
- ttul 5y agoNo, it's not a Ponzi scheme. A Ponzi scheme, "is a fraudulent investing scam promising high rates of return with little risk to investors. A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers." (https://www.investopedia.com/terms/p/ponzischeme.asp https://www.investopedia.com/terms/p/ponzischeme.asp) Modern finance is regulated. Schemes that aim to generate a return have to file a prospectus and must be audited and exposed to legal liability should they fail to follow the rules.
- whimsicalism 5y agoThey are, however, backed by the FDIC.
- sschueller 5y agoOnly up to 250k. Any more and you need your own insurance.
- ARandumGuy 5y ago$250k per account, up to 6 accounts. So the FDIC insures up to $1.5 million. If you have more then that, I think you can find other ways to secure your money.
- toomuchtodo 5y agoAnything above FDIC insurance limits and you’re in US Treasuries, backed by the full faith and credit of the US Treasury. They’re one of the safest financial assets in the world. The risk of default is almost, but not quite, zero.
- ffggvv 5y agothe fed has never not bailed people out, whether it’s money market funds or anything else even if not fdic insured
- anm89 5y agoThe FDIC could not make the system solvent in the event everyone tried to redeem their funds. It can only keep up confidence to try to prevent people from all trying to redeem their funds.
- whimsicalism 5y agoThe government promising by law to pay everyone back does build more confidence than Tether's 2.3 cents + outstanding debt from other exchanges. This is why I stick with defi stablecoins.
- bronzeage 5y agoYou do realize that Tether going down will bring the whole thing down with it right?
- ARandumGuy 5y agoYeah, but in the US the FDIC insures my bank account up to $250,000 (per account!). Tether has no such guarantee, which makes Tether's financials a lot more important.
- tonfa 5y agoWhich is why banks are highly regulated, have reserve and capital requirements and central banks acting as lender of last resorts.