Banks Suck

[Amph]

I keep a pretty low amount in my checking account, just enough to pay a couple months of bills.  I don't really see any reason to keep more than that in my account.

Yes, in most countries the interest rate doesn't beat inflation.
You are losing money by keeping it in the bank account.

7-8% of inflation against 3% max on interest in any bank account, where you freeze your money for a long period

not worth it, the only good thing is that bank are less prone to being hacked

[notbatman]

1st attempt at cashing a cheque (on a Saturday) at a branch of the bank that issued it.

"sorry come back on Monday"

2nd attempt (on a Monday).

"sorry come back during AM hours"

3rd attempt on a Monday in the AM.

"sorry we have to hold the cheque for 4 business days, we can't do that unless you have an account with us"

So there you have it, a bank refusing to cash their own cheque. They suck, they should have told me to fuck off and not come back on my first visit.

[Coinonomous]

1st attempt at cashing a cheque (on a Saturday) at a branch of the bank that issued it.

"sorry come back on Monday"

2nd attempt (on a Monday).

"sorry come back during AM hours"

3rd attempt on a Monday in the AM.

"sorry we have to hold the cheque for 4 business days, we can't do that unless you have an account with us"

So there you have it, a bank refusing to cash their own cheque. They suck, they should have told me to fuck off and not come back on my first visit.

Yup, sounds like America. 

[pitham1]

1st attempt at cashing a cheque (on a Saturday) at a branch of the bank that issued it.
"sorry come back on Monday"
2nd attempt (on a Monday).
"sorry come back during AM hours"
3rd attempt on a Monday in the AM.
"sorry we have to hold the cheque for 4 business days, we can't do that unless you have an account with us"
So there you have it, a bank refusing to cash their own cheque. They suck, they should have told me to fuck off and not come back on my first visit.

Yup, sounds like America. 

Or any other country in the world.
There is a huge imbalance in the power equation between a bank and its customers. Banks know that they can treat retail customers badly and get away with it.

[Preclus]

There is nothing about banks that "suck". A bank is a business. If you want to buy a bank yourself, go ahead. You can search "banks for sale" on any search engine and will be able to find a large number for sale.

You will need to take deposits and make loans. To get deposits, you will need to get people to trust you to take their money for safe keeping. Once you get enough deposits, you can loan those deposits out to other people. You pay the people who give you money for safe keeping an interest rate (could be 0.01%) and loan the money out at an interest rate (3%+) and then take the spread.

You will do well if everyone pays you back and people keep their trust in you. If you make stupid loans, as many banks did leading up to 2008, you may lose so much money that you can't cover the deposits.

If you don't have the Federal Reserve/government to back you up in that situation, then you will lose people's deposits.

If you loan money out long term and take in money short term (via deposit) and people lose faith in you and everyone comes in to take their money out, you will experience a "run on the bank" and could end up having to tell people that you don't have the money to give them as shown nicely in "It's a Wonderful Life"

https://www.youtube.com/watch?v=iPkJH6BT7dM

Now, as a depositor, would you put your money in a bank that had no Fed backing or one that did? In the US, we have FDIC insurance so if a bank royally screws up and lends money to people who don't pay it back, the depositors can still get their money out.

As part of that, when you own a US bank, you can't make stupid loans. You can't go loaning money out to your friends who aren't going to pay you back. You get regulated. The government comes in an audits you every few months. They go through all your loans and balances and make sure you aren't screwing everything up. And if you are screwing up, they will shut you down before they think you will lose all the money and they will usually sell or merge your bank with a decent one to clean up the mess.

You agree to submit to all that if you own a bank that takes FDIC insurance and government loans.

You don't need to do any of that, of course. If you want to start your own bank without any of that regulation, just convince a bunch of friends to deposit money with you. You can loan it out to other friends. If those friends use that loaned money to buy things from other people you know and you can convince those people to give they money to you on deposit, you can reloan the same money out again.

And there you go, you are a bank without regulation and without any reserve ratio. You can loan out money at an interest rate, get it back with deposits, loan the same money out again, get it back, loan it out again, etc. You are creating money "out of thin air" with no reserve ratio.

You will need to convince people to deposit their money with you, of course, and you better not make many bad loans.

You could do it with bitcoin if you wanted. Take 100 bitcoins on deposit from Person #1. Give him 1% a year in interest for it. Loan out the 100 bitcoins to person #2 at 3% interest. Person #2 buys something from Person #3. Get Person #3 to deposit the 100 bitcoins with you. Loan out the 100 bitcoins to Person #4. Person #4 buys something from Person #5. Get Person #5 to deposit their bitcoins with you.

At the end, you have 200 bitcoins loaned out (to #2, #4) and people have 300 bitcoins deposited with you (#1, #3, #5). And you actually have 100 bitcoins on deposit. There are only 100 bitcoins required for this example.

You can do that forever. And it can work if everyone pays you back and people don't withdraw too much. For example, imagine you did it until there were 100,000 bitcoins loaned out and people had 100,100 bitcoins deposited with you. You would still only have 100 bitcoins on deposit and only 100 bitcoins are needed to do all that lending and depositing.

Ta da, you have a bitcoin bank with a fraction reserve lending system, a money multiplier and everything else.

Now, the questions to you are...

what is the value of bitcoin if anyone can borrow as much as they want at a low interest rate?

does it matter how many bitcoins there actually are when this is going on?

Everything is fine as long as people don't ask to withdraw more than 100 bitcoins at a time and all loans are paid back.

This is how banking systems work at their core.

Now, this is different from central banks. You don't deposit your money with central banks. Central banks exist to keep the banking system from falling apart. Rules are set to determine all sorts of things that relate to banks to keep the system from blowing up. You don't need a central bank but without something like it, you end up with a system where people create banks, make stupid loans and lose everyone's money.

Many countries have a completely government controlled banking system. In the US, it is a mix of public/private institutions and you can start your own bank (or credit union or whatnot).

[tommorisonwebdesign]

Now, the questions to you are...

what is the value of bitcoin if anyone can borrow as much as they want at a low interest rate?

Bitcoin's value comes from it's deflationary nature and the fact that it is a new technology with many applications that make it way superior to any fiat currency. If more people were not as ignorant as you are, more people would be using it

does it matter how many bitcoins there actually are when this is going on?

Well, yes and no. This hypothetical Bitcoin bank has many possible customers and new money from new and existing customers are always being deposited in the bank. In most instances where people do not pay back their Btcoin loan, their collateral gets sold. The banks usually send threatening letters to foreclose your home if you do not pay off your loan and you lose your real estate investment. There is alwayys collateral involved and banks usually go after people who do not pay credit cards bills with threatening lawsuits. These kind of intimidation tatics apply to Bitcoin.

 
Everything is fine as long as people don't ask to withdraw more than 100 bitcoins at a time and all loans are paid back.

As stated above the bank can still recover owed money

This is how banking systems work at their core.

Now, this is different from central banks. You don't deposit your money with central banks. Central banks exist to keep the banking system from falling apart. Rules are set to determine all sorts of things that relate to banks to keep the system from blowing up. You don't need a central bank but without something like it, you end up with a system where people create banks, make stupid loans and lose everyone's money.

Many countries have a completely government controlled banking system. In the US, it is a mix of public/private institutions and you can start your own bank (or credit union or whatnot).

As I said above, banks have many tactics to go after peoples money. Collector calls, sending thugs, destroying your credit score, foreclosing your home, selling your business, and many many other nasty tactics they still go after your money. The federal reserve is stealing from the wealth of the US economy every time a new dollar is printed. There is nothing that is backing the US dollar other than the falling American economy. If the central banking system worked so well, why does America experience increasing amount of debt? Bitcoin is based on a technology that takes time to find its true value. The dollar will collapse and Bitcoin will probably take over.

[Preclus]

I'll address your two main points.

First, the scarcity (deflationary nature) of something does not determine its monetary value. It is desire and need vs. ability to access that creates monetary value. If scarcity created value then an old pair of your shoes would increase in value over time as there is only one pair of your old shoes.

The value of bitcoins are determined by desire and need along with the ease it is to acquire them. If borrowing bitcoin was easy, the monetary value of bitcoin would go down if you just look at the scarcity component. However, if the ability to borrow bitcoin caused the desire for it to go up, that could cancel out the negative monetary affect of the increased ease of access. It is not a single factor that causes monetary value.

Second, your comments about banks is not true. Banks do have collateral for loans, that is correct.

However, many, many times, that collateral does not make up for the value lost when a loan goes bad. There are millions of examples of this. Credit card debt is an easy one to understand. Everyone has likely known people who racked up too much credit card debt and then went bankrupt. The banks lost the money they lent in that case.

When credit card debt goes bad, banks usually sell the bad debt to a collection agency at a loss so they don't have to deal with it. You can buy collection agency debt yourself if you want and try to make money off it. There are many collection agencies. Some do decent business, some don't. Similar to banks you can simply type "collection agency for sale" in a search engine to find one if you want to buy one. Buy up the debt and hire a bunch of people to start calling people to try and collect. The banks certainly do not make a profit selling their bad debt to these agencies. The really bad debt can be bought for pennies on the dollar.

The reason the financial crisis in 2008 was so bad is because banks were making 90% or 100% loans (or more) on homes at their then market value. Housing prices dropped 50% so people didn't pay back their loans and the banks ended up with huge portfolios full of crappy homes that they couldn't manage and needed to sell. The government had to step in and loaned money to the banks so they didn't go under. And the government purchased many of the banks crappy loan portfolios. And they merged together banks with terrible loan portfolios with stronger banks. And the work done did keep the system from failing. The banks lost real money and many are still today digging out of that hole. It is the main reason the Fed has been keeping interest rate low.

So, no, banks don't always have a way of recouping the money they lose. f it was that easy, we'd all own banks and the richest people in the US would be bank owners. If you look at the rich list, they aren't the owners of banks. They are tech company founders, Walmart heirs, hedge fund traders and the like.

[DomingoX6]

Banks sucks, Bitcoin is the future 

[cjmoles]

I just visited the bank... denied until Monday. 

Global adoption can't happen soon enough, what a crock of shit this fiat banking system is.

I had some problems friday trying to send a transaction overseas, and I was told to "please you'll have to wait until monday" without any details on what went wrong. You can imagine my frustration. Banks do indeed sucks and are deprecated as hell in this post-Bitcoin reality. I can't wait until Bitcoin scales up to defeat all those dinosaurs.

This might be a no brainer, but why did you try to use a bank instead of just using bitcoin?  Your life would've been much easier and less frustrating for sure.  Banks do suck, and that's why we have bitcoin to get around them.

[tommorisonwebdesign]

I'll address your two main points.

First, the scarcity (deflationary nature) of something does not determine its monetary value. It is desire and need vs. ability to access that creates monetary value. If scarcity created value then an old pair of your shoes would increase in value over time as there is only one pair of your old shoes.

The value of bitcoins are determined by desire and need along with the ease it is to acquire them. If borrowing bitcoin was easy, the monetary value of bitcoin would go down if you just look at the scarcity component. However, if the ability to borrow bitcoin caused the desire for it to go up, that could cancel out the negative monetary affect of the increased ease of access. It is not a single factor that causes monetary value.

Second, your comments about banks is not true. Banks do have collateral for loans, that is correct.

However, many, many times, that collateral does not make up for the value lost when a loan goes bad. There are millions of examples of this. Credit card debt is an easy one to understand. Everyone has likely known people who racked up too much credit card debt and then went bankrupt. The banks lost the money they lent in that case.

When credit card debt goes bad, banks usually sell the bad debt to a collection agency at a loss so they don't have to deal with it. You can buy collection agency debt yourself if you want and try to make money off it. There are many collection agencies. Some do decent business, some don't. Similar to banks you can simply type "collection agency for sale" in a search engine to find one if you want to buy one. Buy up the debt and hire a bunch of people to start calling people to try and collect. The banks certainly do not make a profit selling their bad debt to these agencies. The really bad debt can be bought for pennies on the dollar.

The reason the financial crisis in 2008 was so bad is because banks were making 90% or 100% loans (or more) on homes at their then market value. Housing prices dropped 50% so people didn't pay back their loans and the banks ended up with huge portfolios full of crappy homes that they couldn't manage and needed to sell. The government had to step in and loaned money to the banks so they didn't go under. And the government purchased many of the banks crappy loan portfolios. And they merged together banks with terrible loan portfolios with stronger banks. And the work done did keep the system from failing. The banks lost real money and many are still today digging out of that hole. It is the main reason the Fed has been keeping interest rate low.

So, no, banks don't always have a way of recouping the money they lose. f it was that easy, we'd all own banks and the richest people in the US would be bank owners. If you look at the rich list, they aren't the owners of banks. They are tech company founders, Walmart heirs, hedge fund traders and the like.

I guess your one of those BS buyers that has been hoisted on us by the elite. The richest people in the world are the owners the the federal reserve's debt. All new federal reserve notes that exist in circulation are based on the US economy and the value we place on that currency. Scarcity is simply a mechanism Satoshi implemented to protect hyperinflation with bitcoin. This protects the value of Bitcoin in the long run, a feature not provided by the US dollar. Second, corporations are definitely not the richest organizations in the world.  The US government owes trillions of dollars to the federal reserve. The owners of the federal reserve's debt are the richest people in the world.