November 24, 2008

FDIC

I tweeted this already. It's probably not any better with more characters. 

The story we invidual suckers have been told is that if you want to keep your money safe, then it should be in FDIC insured accounts, with the maximum of 100,000 dollars.  At my co-op (a 40 unit building in NYC), we manage our holdings to make sure that none of our capital reserve exceeds that amount at any one bank.

So we have, for years, accepted lower yields than we could have gotten in other investments because our investments were safe.

I suppose they are just as safe. But it turns out that if you were betting the corporation, over and over again,  on red vs black you were also safe.

Moral hazard? It's what for breakfast.

Why would anybody, ever, be prudent?

 

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