I guess you’re thinking that title was a Crazy way to start a post?
- Well let’s think about this a bit.
Banks
- They take in deposits and invest it keeping most of the investment earnings themselves, and risking only their customers capitol.
- When the investments go bad, and they lose money, they pay peoples withdrawals with other peoples money.
- It almost sounds like a Ponzi scheme..
Sam Bankman-Freid
- He took in deposits and invested them keeping most of the investment earnings himself, and risked his customers capitol, and his own.
- When the investments went bad, He paid investor withdrawals with other peoples money.
- It sounds like a bank, I mean a Ponzi scheme.
Hmmm…
Bank
- When they invest in assets (Treasury Bills) with their depositors money, and the value of those assets declines due to market forces they sell them at a loss to pay investor withdrawals .
- And all the money they pay withdrawals with is other depositors money.
- When they don’t have enough cash on hand to match potential withdrawals they stop withdrawals and declare insolvancy.
- They then surrender control of their business.
Sam Bankman-Freid
- When he invested in assets (Bitcoin/ Altcoins) with his depositors money, and the value of those assets declined due to market forces he sold them at a loss to pay investor withdrawals.
- And most of the money he paid withdrawals with is other depositors money.
- When he didn’t have enough cash on hand to match potential withdrawals he stopped withdrawals and declared insolvancy.
- He surrendered control of his business.
Life is funny like that sometimes. Same crime, but no time.
Questions?
I have a few.
- Why is it okay for bankers to do this but not Bankman-freid?
- I am not saying this action is okay, or alright, but what I am saying is why is it okay for one and not the other?
- Why us the Banker on vacation, and the Bankman-Freid in jail?
- If one is in jail for doing the same thing, how do we justify the later being free?
- I realize they have different job titles, but they did the same thing to their depositors.
Those people who lost their money in those bank failures are just as broke as the FTX depositors, except the bank customers have a government insurance policy to rely on when the banker does what the Bankman-Freid did.
