Hacker News Reader

Comment by fwip | Hacker News Reader

Does the average consumer have uninsured deposits?

On paper, no. We're all insured by the FDIC/NCUA up to $250k per institution (or account? I forget). In reality, I think the systemic risk means everyone has deposits on the line as the FDIC can't cover multiple bank failures.

If there were multiple bank failures the treasury would loan the FDIC as much money as needed to cover it.

under what provision? pure discretion? has this ever been tested?

in 2008-2010 the FDIC got on the phone and brokered sales of smaller banks to large banks, specifically because they needed to do their part to stave off disaster with their thin credit line. Congress didn't ask them to do this, they just got on the phone because they had live capitalization ratio data.

If we're talking about bank deposits in the US, no. The median household has drastically less than 250k total

it's 250k per account so.. no one should have uninsured deposits

But if the system collapses, what's the chance of actually getting the value of your money back?

Pretty good. Its insured by an entity that can literally print money.

Yes, but if they print money then your $100k will be worth less than $100k. This is why I asked about value.

People saved to buy an apartment towards the end of the Soviet Union. When the Soviet Union collapsed they could barely afford a car for the saved money.

You don’t need for the financial system to collapse for inflation to eat into these deposits. Even target inflation (about 2%) eats these low yielding deposits over the long term. And the never ending increase of public debt will result in high inflation at one point. My point being that if you have $250k in savings, it probably shouldn’t sit and melt on a savings account.

Usually a bank run will involve people hoardong money, and run away inflation is caused by people spending money as quickly as they get it.(is a rapid increase in money velocity and the other a rapid decrease). So these two forces should counteract each other.

The Venezuelan government can print money too. I really doubt people who get the the face value money back while the value of the money plummets are going to be fooled. How many people will like the price of petrol and iphones doubling overnight?

All of the people that can already afford 15 each of those everyday items won't mind.

Reply on news.ycombinator.com