Comments on: Run-Prone Financial Contracts https://www.isegoria.net/2014/01/run-prone-financial-contracts/ From the ancient Greek for equality in freedom of speech; an eclectic mix of thoughts, large and small Mon, 01 Jun 2026 14:48:47 +0000 hourly 1 http://wordpress.org/?v=3.6.1 By: Isegoria https://www.isegoria.net/2014/01/run-prone-financial-contracts/comment-page-1/#comment-1088634 Isegoria Mon, 06 Jan 2014 14:24:00 +0000 http://www.isegoria.net/?p=33891#comment-1088634 I don’t think it would be difficult at all to move consumer banking away from fractional reserves and toward a mix of full-reserve checking accounts, supported by fees, and money-market accounts of some kind.

]]> By: James James https://www.isegoria.net/2014/01/run-prone-financial-contracts/comment-page-1/#comment-1088336 James James Mon, 06 Jan 2014 08:44:29 +0000 http://www.isegoria.net/?p=33891#comment-1088336 The problem of maturity transformation is that it causes bank runs, and the problem of bank runs is that they cause a swift fall in the supply of credit, and so a swift increase in interest rates. An economy with maturity transformation will be used to low interest rates, and as they rise, businesses go bankrupt and it takes a while for new ones that can cope with higher rates to start up.

So the problem is: how do we get from here to there?

]]> By: Alrenous https://www.isegoria.net/2014/01/run-prone-financial-contracts/comment-page-1/#comment-1085614 Alrenous Sat, 04 Jan 2014 06:00:43 +0000 http://www.isegoria.net/?p=33891#comment-1085614 There is no market failure as bad as the coercive intervention intended to fix it.

try to regulate financial institutions not to overuse that which we subsidize

And then more regulation to block the loopholes in this regulation, and so on ad infinitum until the only way for a bank to function is to know who to bribe and how much.

Just let banks fail and soon enough depositors will learn that demand deposits are untrustworthy.

]]>