Once you do one bailout, you end up in a dilemma.
If you don't bailout this time, why not? You were suppose to. To "protect consumers", by diluting all your citizens.
If you do bailouts, then banks have 0 incentive to manage risk. It would be stupid not to take max risk for max returns, and split the rewards as soon as you get them. When you fail, you get a bailout.
Bailouts encourage taking bigger and bigger risks, which require more bailouts...
Tricky problem...
Jawad Dashti
npub1eu…djdtx
2023-03-12 19:26:22
Author Public Key
npub1eu4gqge7fh8604c7uwk4j07l8vhhzsrpfrskzzj8lp504ehqa25qjdjdtxPublished at
2023-03-12 19:26:22Event JSON
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"content": "Once you do one bailout, you end up in a dilemma.\n\nIf you don't bailout this time, why not? You were suppose to. To \"protect consumers\", by diluting all your citizens.\n\nIf you do bailouts, then banks have 0 incentive to manage risk. It would be stupid not to take max risk for max returns, and split the rewards as soon as you get them. When you fail, you get a bailout. \n\nBailouts encourage taking bigger and bigger risks, which require more bailouts...\n\nTricky problem...",
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