That's about as useful as pointing to some equally unrelated thing that did turn around. The truth is nobody here knows either way, and if you did you'd be in the process of becoming very wealthy on that knowledge. Let me make a wild guess that you will not actually be putting your money where your mouth is on this?
USDC claims to have the entirety of it in short term US treasuries. I don't know enough about banking to understanding whether the evidence in the article conflicts with that though.
> If you have any money left in crypto at this point, then you get what you deserve.
Yeah, I heard this in 2017 too. In reality neither of us knows how things will look a year from now. Short term will probably be ugly though.
This kind of systemic risk did not exist in the crypto space in 2017. USDC didn't even exist yet, and USDT was a small player. The exchanges have always been the major risk factor for crypto (see: Mt. Gox and the other exchanges that have swallowed their customers crypto along the way), but it's not until the last few years that the fate of all the exchanges have been linked together. That's why this time is different.
Theft is bad, but it isn't an existential risk to the whole system. The value is still there, just moved.
Leverage is a different matter entirely, because "fractional reserve" style financing inflates the money supply.
The monetary economy is like a juggling act. Increasing velocity makes it look more valuable, but when velocity slows down, the system becomes insolvent.
Tether was not a small player in 2017, not sure if you remember but people were already sounding the alarm bells about it. Obviously it's bigger now, but so is the whole market.
Having USDC to compete with USDT puts things in a less risky position, not more. All evidence points to USDC being fully backed. The "bank run" scenario this article alludes to seems like a huge stretch.
Yes, USDC is fully backed at the moment. Mostly by deposits in SBNY. However SBNY has most of its money lent out. Therefore the size of a run that USDC can survive is set by how much investments its banks, mostly SBNY has, which https://www.marketwatch.com/investing/stock/sbny/financials/... says is somewhat over $9 billion.
There is over $50 billion of USDC outstanding. So trying to redeem about 1/5 of it will result in a run on SBNY that SBNY can't handle.
Our financial system knows what to do with that situation. It is outlined in https://www.fdic.gov/consumers/banking/facts/payment.html. SBNY gets shut down, a new bank buys them, and depositors with accounts over $250,000 see their bank accounts reduced TO $250,000. USDC, as the largest of those depositors, would then no longer be backed.
So in the event of a crypto panic, about 80% of the money backing USDC is likely to go poof. Not because USDC did anything wrong, but because that is how banks work. It is not for nothing that banking has been described as "picking up pennies in front of a steamroller".
> Our financial system knows what to do with that situation. It is outlined in https://www.fdic.gov/consumers/banking/facts/payment.html. SBNY gets shut down, a new bank buys them, and depositors with accounts over $250,000 see their bank accounts reduced TO $250,000. USDC, as the largest of those depositors, would then no longer be backed.
That is..not how it works. Are you assuming all of SBNY's loans are worthless / bad debt? If SBNY folded the loans would get sold to pay back the creditors. They wouldn't get the full value obviously, but those loans don't just magically disappear. They'd certainly get more than the 20 cents on the dollar you are claiming..
Even your own link covers this..
> If for example, a depositor has only a single account with a balance of $255,000, he or she would be paid $250,000 through FDIC insurance and would receive a claim against the estate of the closed bank for the remaining $5,000 which is not insured. The depositor would be given a Receiver's Certificate as proof of this claim and would receive payments as the assets of the bank are liquidated.
Someone being so confidently and condescendingly wrong is peak hackernews.
The bond market is almighty [1], and given that daily volume seems to be around $bn 500 or 600 [2], it seems that it would not be too hard for USDC to unload $bn 50 of treasuries in a fairly short time (despite worries about bond market liquidity [3]).
However, as the article points out, if USDC gave most of the money to a bank (SBNY), then it is not obvious that the bank put it in short term treasuries - the bank could have done the usual thing of putting it into longer term loans ("maturity transformation"). Given that USDC constitutes nearly half of that bank's balance sheet, but cash/cash equivalents less than a third, things could get interesting on the way down.
[1] > In the 1990s, the Democratic political adviser James Carville said: “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.” https://www.bloomberg.com/news/articles/2018-01-29/the-daily...
> That's why you have FDIC insurance to cover the time period between say, a 30 day treasury and the worst case bank run.
Well, usually banks use your money for much riskier loans (business loans, personal loans, mortgages) which is why you need FDIC. Not because treasuries take too long to sell.
The volume on US treasuries is like half a trillion a day, so it shouldn't take very long to liquidate even large amounts of USDC's holdings..
Even worse is that a lot of these stablecoins have their funds deposited with Silvergate, a niche crypto bank that makes its money by lending to people like Michael Saylor. Their stock is down about 50% over a few months.
> The volume on US treasuries is like half a trillion a day, so it shouldn't take very long to liquidate even large amounts of USDC's holdings..
US Treasuries are down like 10% this year.
Yes, a bank can liquidate, but at a loss, a 10% loss in this case. The bank would rather hold-onto maturity, which could be 30-days or 90-days for some of the shorter bonds.
6-month US Treasuries were 0.36% APY on January 19th, 2022.
1-month US Treasuries are 1.13% APY today, June 14th, 2022.
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So if you had bought a 6-month US Treasury on Jan 19th, you'd have a 1-month Treasury with .36% APY.
That's worth much much less than the current 1-month US Treasuries that are available, so you'd be forced to sell at a loss if customers requested their money back.
> That's worth much much less than the current 1-month US Treasuries that are available
It's not 10% less, or anywhere close to it. You are only missing out on roughly (1/12) * (0.0113 - 0.0036) * (treasury amount) vs a 1 month treasury bought today..I'm having trouble finding a price chart for 1 month treasuries.
6-month is obviously more sensitive to the rate drop than 1 month, but the 10% number you are referencing is almost certainly for long term treasuries, not short term..
BND is not "just" long terms, its a mix of all kinds of bonds. BSV is a mix exclusively of short term (~5 years or less).
VBLAX, Vanguard's long-term bond ETF, is down 23% YTD.
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Given how BND is largely composed of a mix of US Treasuries (of many different maturities), I think the 10% quickie estimate I gave earlier is correct. I'm buying/selling these things in my portfolio, so I've got a good idea of how they're performing.
Short term for treasuries is generally considered <= 1 year, BSV is only 1 to 5 years.
I just looked it up, Circle says they only hold treasures that mature in <= 3 months, so yeah I think even 6.5% is a massive overestimate to how volatile their treasury portfolio is..probably more like <1% which is easy to cover if they just hold a tiny bit of the deposits in cash..
> Short term for treasuries is generally considered <= 1 year, BSV is only 1 to 5 years.
BSV is literally named "Vanguard Short-Term Bond ETF".
That being said, the only "standardized" terms I'm aware of are Bills (less than 1 year), bonds (greater than 10 years), and Notes (1 to 10 years).
In any case, it is clear that BSV is considered short-term by Vanguard and its investors. So I'm more than willing to believe in Vanguard's language over yours.
haha, ok, so now we're just quibbling over the definition of short term instead of discussing the concrete question of how volatile USDC's treasuries are? Just replace instances of "short term" with <= 3 months, now are we in agreement?
My point is that your 10% figure is not applicable to the treasuries Circle claims to hold. You can call them whatever you want.
The Fed is about to raise rates by 0.75% (estimated, maybe 0.5% to 1%) this week.
What do you think will happen to the value of all those treasuries? Even short term ones will decline in value. Not only because of the actual rate increase, but also over the expectation of future rate increases to clamp down on inflation.
10% drop? Probably not. But any drop in price followed by a bankrun would end up in insolvency.
For a 3 month treasury the drop will be tiny, like less than 1% tiny. It's would be easy to cover during a "bank run" given that (a) they hold some portion of deposits in cash anyway and (b) they've been earning interest on these deposits for years now. That’s my whole point..do you disagree?
Look man, I've lived through 2007 / 2008 when the money market funds broke the buck.
I know that even a portfolio consisting of nearly exclusively treasuries can still decline in value. That's all I'm saying. Banks, even with their high quality debt instruments, aren't immune to the effects of a bank run.
The value of those short term notes still climbs up and down daily on the market. With a big enough decline, issues can arise.
I'd assume short term is 3 years or less, so make it a 2y duration on average, and assume rates went up by 2%, then we are talking about a 4% loss, not 10%.
Still, previously I didn't want to hold USDT anymore; now I don't want to hold USDC anymore either.
Short term liquidity problems are handled by the repo market, where banks can take short term loans from other banks to cover withdrawals. In a crisis situation the lender of last resort (e.g. central bank. So federal reserve for USD) will step in and make the loans.
The FDIC is designed to cover solvency issues, not liquidity ones. It does not kick in until afterva bank has failed.
Treasuries are one of the most liquid assets in the world. The question is if they could crash in value while simultaneously maintaining the dollar value, that could break a peg.
Since they are short term the dollar amount wouldn't change much, even with big swings in interest rates. USDC is also tied to the dollar value (not inflation or interest rate adjusted) so I don't see how this could happen
Of course it's easy to cherry pick in hindsight. But we're talking about people with cash right now, they are investing at current valuations not valuations from 6 months ago.
> Only a minority of people can withstand an onslaught...
Is that true? Most people aren't addicted to anything let alone social media..I really don't buy the claim that people have literally no control over their actions. What's your solution? Ban sugar, alcohol and social media? Padding on the sidewalks?
> What's your solution? Ban sugar, alcohol and social media? Padding on the sidewalks?
There isn't "one solution". And bans generally are not a solution.
But we need to fight with the same weapons they're fighting, for example, let's take sugar and unhealthy foods.
They're presenting their food as fun and glamorous, let's blow that up, like we did for tobacco.
No more mass advertising for it, anywhere. Horrible labels showing disfigured obese people that are suffering because of their addiction to junk food.
The food is cheap because they use crap ingrediens? Let's tax food based on universal standards agreed upon not by the industry, but by healthcare specialists. The more you're off the mark from healthy food, the more you get taxed (excises, same as for alcohol and tobacco).
Heck, I'd earmark those excises as funding for subsidies meant for producers of healthy, bio foods.
These junk food companies are making their stuff cool, so let's prevent that and they're making it cheap by passing their externalities to us (diminished long term health) so let's make their food more expensive and let's make the healthy stuff cheaper.
Ah, more than that, quotas of healthy food in every place serving or offering food. Get rid of food deserts. Poor people with low mobility should have access to healthy food at decent prices.
Yes, this is all very complicates. Yes, it's very political.
But doing nothing achieves nothing. Worse than that, doing nothing actively degrades the situation since these actors are actively harming people in very subtle ways.
20 years ago the sugar lobby told everyone that sugar was good and fat was bad.
I'm all for banning specific ingredients and processes that are known poisonous (like BPAs for example are banned in many countries, deservedly) but unilaterally deciding what's healthy and having quotas for healthy foods is extreme. It will be the sugar vs fat thing all over and only the rich will benefit.
Just to make sure I understand what you’re proposing, taco trucks and ice cream shops would be illegal in your ideal world yeah?
>And why is having quotas for healthy foods extreme?
Because there is no such thing as a universally healthy food. "Healthy food" is a buzzword used to make people feel good about the food choices they make that (usually) don't taste that great.
The primary concern with healthy eating is to eat enough and in a decent balance of a laundry list of things: protein, fats, (carbs), vitamins, minerals and probably some more. You can't eat all of them at once either, because some of the vitamins and minerals can end up blocking each other from absorption. Missing any of these for long enough in large enough quantities (or large enough imbalances) is going to cause health issues.
Some people like calling foods that have few calories and little nutritional value as "healthy", but the value those foods provide comes from limiting the average person from eating something else. Eating a cucumber doesn't give you much, but you're less likely to have those fries after you've had the cucumber. But you certainly wouldn't be fine with only eating cucumbers long-term.
I’m not a libertarian at all, I think taxes should be pretty high and there should be universal healthcare. Pretty silly I need to say that, though, and bringing it up is a non sequitur. I’m curious, do you think most non libertarians would agree with what you’re proposing?
But yeah, if you think forcing an ice cream shops to sell sides of broccoli (that nobody will order) to comply with some silly 20% law, we probably won’t get anywhere discussing. It takes a pretty active imagination to picture something like that having a positive outcome.
Oddly enough just yesterday, I was thinking of why alcohol and foods with low nutritive value haven't suffered the same fate as tobacco.
If you advocate for universal healthcare (like my country has), then it's ultimately in society's best interest to keep everyone as healthy as possible to avoid burdening the healthcare system, which does mean that government needs to step in and place limitations on advertising, sales to minors, laws, etc.
Just as a few examples, we (my country) currently has: no advertising to children under 13, seat belt laws, helmet laws, smoking packaging laws, alcohol advertising laws, and so on. It's odd that communities are spending millions on active living infrastructure, and simultaneously allowing companies to run ramshod marketing unhealthy and addictive products. And by 'odd', I mean that these organizations have enough backing to influence politicians to the detriment of society.
As I recall, tobacco companies only took action when laws changed or when they started losing lawsuits - given how destructive alcohol is for society it wouldn't be a stretch to make it less socially-acceptable to consume 'empty' calories. Some industries are mandated to spend part of their advertising budget on 'preventative' campaigns, but in almost 100% of the cases, these 'anti-whatever' messages are cleverly disguised to sell even more of their product (e.g., anti-gambling, soft drink recycling). There may be no perfect solution, but doing nothing isn't an answer either.
> Most people aren't addicted to anything let alone social media
Even if it's just 5-10% (difficult to prove one way or the other, but some have estimated it's within this range) that's a massive amount of people on a global scale. That's enough to influence elections, for example. Scrutiny seems reasonable.
Sure let's say it's 10%, is the conclusion you draw from that that free will doesn't exist? Do 100% of people need to give up the freedom of choice to lower that figure?
Not sure what you're getting at about elections, are you saying that's a reason to intervene? I don't really want the government making policy for the purpose of influencing election outcomes.
They aren't talking about bans, but other controls. Cigarettes are not banned outright, but cigarette companies are banned from advertising in a lot of mediums and cigarette cartons have a warning label about the harmful effects of smoking them. For a long time there were PSAs about how bad they were for you too, to counteract the damage already done by the tobacco industry's marketing. And we tax them pretty harshly. People still smoke, it is still legal to smoke. We could do similar things for food and social media without outright banning it.
Yeah that's fair. Like I alluded to in a sibling comment thread, though, I think doing the same thing for food is pretty dangerous given our still pretty limited understanding of what foods are actually bad for you. Eggs are still oscillating between healthy and unhealthy every few years (although I think we're settling on healthy? Who knows!). Cigarettes aren't needed to sustain life so there's not as much risk to meddling like that.
The only thing I can really get behind is stricter controls on individual ingredients that are very clearly unhealthy and obviously don't need to be part of your diet (BPAs, trans fats, etc). Once you start messing with society's macros though it's fraught territory and very easy to do harm IMO.
The RAM usage on Mac is a little misleading I think. If you have lots of free RAM it will aggressively start caching stuff that could easily be offloaded if memory pressure were to increase.
Prettier / linter can just be run in a git hook and verified in a GitHub action / CD step though. Prettier config should be committed to the repo itself, then let devs decide how they want to apply it to their workflow (and prevent them from merging otherwise).
The "run the whole dev environment in the cloud" part actually sounds pretty nice. 10 seconds to have everything running?? And I assume you can switch between multiple environments you have saved, tied to branches? That's pretty sweet and opens up tons of opportunity for server side build caching to speed things up (don't need to compile the packages you aren't modifying).
Is VS Code actually required, or is there some way you can edit source code locally then push to codespaces to actually run it?
What about JetBrains IDEs though? What if I want to run some one-off script on my local terminal that's interacting with source code files? Emacs and vim plugins don't go far enough IMO, it needs to fully support the local filesystem.
No, but I'm arguing that it's very unreliable, often fully backfires and becomes actually destructive, and that in our modern society there are other factors that are much more relevant to people's success in life, and blood relations I would say is fully arbitrary.
It's also just as natural for people to branch out and leave their families, as it is to stay close to their families.
And I think it's irrelevant to the discussion of shortening working hours, and a bad example because it's another oppressive construct.
It's like arguing for shortening working hours so that people can go to church more, and church is healthy. Really? That's highly debatable, and obviously another power structure which is also old fashioned and has seen decreasing success.
How about just shortening the working hours so that people can be more, free? And do what they want?
> so that people can go to church more, and church is healthy. Really? That's highly debatable, and obviously another power structure which is also old fashioned
This one is so debatable because the definition and theological implications of Church 'healthiness' depend upon many different variables and can differ subtly across all Churches.
Church isn't a 'power structure' though. It relies on voluntary participation. You can walk out of Church whenever you want.
Doing what you want tends to be quite narrow, hedonistic and unsatisfying in the end. It's easier to make the argument for free time from higher principles.
Haha ok so church has no power. And people can never be free, they must be institutionalised, and we should use shortening of working hours to just move them to a different institution that is even more old fashioned and increasingly failing, than then ones we are freeing them from.
Well I guess we can say that we have a fundamentally different view on what constitutes development and improvement of life and society.
I doubt we have a different view, as I haven't stated one on 'what constitutes development and improvement of life a society'.
Freedom is the ability to swim in any direction you want, so go ahead. Do whatever you want. The map of your possible options already exists and the institutions are just one or many worthwhile places to visit. When people do whatever they want it quite often ends up on a place on the map where there is a lot of hedonism and not much in the way of higher meaning or valuable aims.
As a dispassionate observer it is my inclination to suggest that people will take the argument for more free time off work in the favour of church and family as an easier argument to make, given it's connection to a higher meaning and relatable values. A boss will likely see anything connected to 'wants' as room for more work.
