posted by dennisn on February 28th, 2008 at 10:00PM
Hrmm. It would appear that placing your money in a bank, contrary to the intuitive perception of what a bank is (a secure storage depot), is actually an act of gambling. What if I did want a *secure* storage depot for my money (with the convenience of debit/credit cards -- otherwise i'd just keep it at home)? Do any such services exist today -- places that simply keep my money in a secure room; that don't gamble with it? I certainly think there's a demand for such institutions. Why can't the government offer such a service? I assume the administrative costs would be minimal.
I remember hearing that canadian banks now insure our savings for UP TO about $100,000. This appears to be a better way -- but why not simply guarantee the security of /all/ our savings? I assume, in the event of another stock market crash, that this insurance would be paid via taxation -- which makes sense, since (by the law of conservation of mass and energy) the invested money still exists somewhere, and thus taxation would get it back.
I remember hearing that canadian banks now insure our savings for UP TO about $100,000. This appears to be a better way -- but why not simply guarantee the security of /all/ our savings? I assume, in the event of another stock market crash, that this insurance would be paid via taxation -- which makes sense, since (by the law of conservation of mass and energy) the invested money still exists somewhere, and thus taxation would get it back.
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There is no conversation of mass and energy
posted by Driusan on February 29th, 2008 at 7:12PM Money isn't gold backed anymore, as Daniel corrected me months and months ago.
It's just a number in a database with a lot of laws about what you can and can't do to that number.
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posted by dsk on February 29th, 2008 at 3:11AM
/Do any such services exist today -- places that simply keep my money in a secure room; that don't gamble with it? /
No. Keep it under your bed if you're worried about banking. Besides, there are much worse things that can happen to your paper currency than a stock market crash - just ask the citizens of Zimbabwe with carts full of money. Nobody there worries about "fractional-reserve banking". Banks there don't go bankrupt, but the printing presses are working overtime. So many things would have to go very wrong in order for you to not be able to take out your savings that if we do get to that point, your measly savings will the least of your worries. /Why can't the government offer such a service?/ Just because.
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posted by rick on February 29th, 2008 at 12:52AM
Not sure what the scope of this discussion is, or how much econ background you have, but modern banks really evolved away from being a secure storage of money a long time ago. What we have now is http://en.wikipedia.org/w...-reserve_banking fractional-reserve banking, where banks don't ever have enough cash on hand to pay everyone who has an account. Instead they take the money to invest and to give out interest-generating loans. This won't change anytime soon, since we're accustomed to having bank accounts pay interest /to/ us, rather than paying administrative fees to the bank.
If you want something different for your money, perhaps you're looking for credit unions, but they're still a financial institution, although some put more emphasis on creating profit for customers as well as the institution itself.
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