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start implying that the risk of carrying your entire life savings in cash (monumentally fucking risky) is equivalent to the risk of bank and government insolvency (incredibly low risk). You really lost me thereWith two exceptions, literally everyone over 40 that I've seen in person in the last three years lost most of their life savings to bank and government insolvency. Many of the older people have lost them more than once. So did most of the people in the US in 1930, most of the people in Germany in the 1920s (and again in the 1940s), most of the people in the USSR in the 1990s, and so on. The US banking crisis in 2008 really only wiped out Bear Stearns and some FDIC-exceeding depositors in banks like WaMu, but it came very close to being a great deal worse. A very substantial fraction of the people alive today have lived through one of these events; a larger fraction will live through one in the next couple of decades.
People tend to systematically underestimate the probability of rare events like banking crises due to unfamiliarity with history and travel.
By contrast, the vast majority of people who carry their life savings in cash do not happen to get robbed that day. On average, a person might get robbed every ten years — more in big cities and high-crime countries, less in rural areas and low-crime countries. That's once every 36,500 days. Carrying around large amounts of cash increases that risk, but probably by less than an order of magnitude, since it's hard for muggers to tell when you're carrying it, unless they can X-ray you.
The odds are something like:
- lose your life savings to an economic crisis: about 1 in 3
- lose your life savings because you happen to get mugged on the one day you're carrying them across the country: about 1 in 10,000, unless you have a TSA or something equivalent
So, no, I was not implying that the risk of carrying your life savings in cash is equivalent to the risk of bank and government insolvency. That would be absurd; the risk of bank and government insolvency is three orders of magnitude higher. What I was saying (not very clearly, it seems) is that the safeguard against your life savings getting stolen by a TSA agent in the airport is an incorrupt government with working checks and balances to prevent such thefts, and that's the same safeguard you have against the government confiscating the contents of your bank account. If your government is so corrupt that it robs random people of their life savings in airports whenever it has the opportunity, there's no reason to expect that it will confine that corruption to airports.
> You started out strong pointing out that older people, especially those from other countries, may well remember a time when putting all your money in the bank was a bad risk.
You misunderstood that part too; I regret evidently having written so unclearly. I was saying that older people, especially those from the US, may well remember a time when keeping your money in dollars, whether in a bank or in your mattress, was a good risk, or at least not equivalent to lighting a few percent of it on fire every year. The dollar lost only about half of its value from 1933 to 1973, so it was a reasonable if suboptimal savings vehicle; since then it's lost 96% of its value.
> Also, if you think bitcoin is the answer to this, I have some bad news for you.
I'm all ears, but given the above, my expectations for this conversation are low. This had better be good.