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What industry secret are you aware of that most people aren't? (programming.dev)

submitted 5 months ago by protein@programming.dev to c/asklemmy@lemmy.ml

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[–] CanadaPlus@lemmy.sdf.org 4 points 5 months ago (1 children)

I mean, there's all kinds of math that goes into making modern fractional reserve banking a self-correcting system with a reasonable theoretical basis, but I'm guessing you've made up your mind already.

[–] smayonak@lemmy.world 1 points 5 months ago (1 children)

Sorry I appreciate your comment. So I read (erroneously?) that central bankers had done away with the reserve ratio in the fractional reserve banking article. And that just seems like a reckless thing to do given how prone to bubbles our economy is.

One of the main points in "this time is different" is that despite the math, we are experiencing greater and greater asset bubbles and at no point in world history were things actually different.

[–] CanadaPlus@lemmy.sdf.org 2 points 5 months ago* (last edited 5 months ago) (1 children)

In a lot of jurisdictions there's no minimum reserve requirement anymore, in cash. It's not really a problem, because at the big bank level money on paper is barely real. If they need more, they can almost just ask. They do have to have a certain minimum amount of capital, though, which can take a number of forms.

I mixed up my exact terms a bit earlier, sorry about that. I'm not a professional macroeconomist, I only know enough to know they're not completely full of shit.

we are experiencing greater and greater asset bubbles and at no point in world history were things actually different.

I'm not sure what you mean by this. If things aren't any different from before, how can we have bigger and bigger asset bubbles? I don't know that we do, really. The niche for bear investors is very full, if something's overvalued by the whole market you and me won't know either.

[–] smayonak@lemmy.world 2 points 5 months ago

Everything you wrote lined up with the article on wikipedia so if you got something wrong I didn't see it.

I'm referring to the book "This Time Is Different: Eight Centuries of Financial Folly" the title of which mocks the oft repeated defense of bubble investors:

https://www.nber.org/system/files/working_papers/w13882/w13882.pdf

But their point is that every single asset bubble ended up popping, despite the protections instituted by banks and governments. They also point out that the bubbles have been getting bigger and bigger