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Comment by DubiousPusher | Hacker News Reader

It doesn't take a CPA to know that depositing above 250k comes with increased risk. And I think you're kind of conflating types of consumers here. People depositing above that limit are generally not working from the same limitations and lack of information that regular people are.

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Exactly. Circle and USDC are essentially a bank themselves, and those deposits were just guaranteed. Risk free return.

> People depositing above that limit are generally not working from the same limitations and lack of information that regular people are.

250k is not that much money. What a weird statement.

Feels like a lot to me. That's more than a year's wages.

Consider financially responsible people in their 50’s and 60’s that have had decades to save. There are plenty of “regular”, middle class people with this type of savings in their account.

If you have that much in liquid cash, you meet virtually no definition of the term "middle class". You are upper middle class at leadt and you probably have a financial advisor who is telling you that you shouldn't locate all your money in one account unless it is yielding in a way that justifies such a risk. At least I hope you do.

Or you're just old and you don't believe in investing. Lots of people are like this.

I concede that edge case. My dad hides cash in coffee cans.

Yes, that is a lot of cash for an individual. I don't really know why anyone would sit on a lot more cash than that without at least putting a healthy portion into Treasuries or other durable assets.

For businesses, it is a trickier proposition but there are reasons that companies roll cash into assets and operate largely from credit.

Companies need to run payroll twice a month. $250k is about one months payroll to 25 people. Many companies are a lot larger than that. You also have planned and unexpected expenses and other payments. Many payroll and providers also require you to set up one account where the funds are pulled. You don’t want to move money around every week, so you keep heathy balance.

I don't disagree, but fwiw it's only about one month's payroll for 25 people if each employee makes around $200k per year.

Obviously people have different salaries but also are payroll taxes and other taxes or fees that also need to be paid like unemployment insurance and whatever else the local government has decided. Sometimes these are collected city/county as well as at state level.

Benefits also cost $500-2500/mo (if you cover 100% employee and 70% dependents).

Not complaining but just saying there are costs that are not always apparent to employees.

also rent, servers, the cost of anything else you have to run your businesses. For broadly generic tech companies, take everyones top line salaries, double them, that is your rule of thumb monthly expense line item that wraps everything up (rent, taxes, the cost of doing business, marketing spend, etc)

It’s also never adjusted for inflation, despite this mess in theory being triggered by raising of interest rates due to super high inflation. 250K when it was set in 2010 is the equivalent of almost $350K now. If we ignore that, then we’re just admitting the number is totally arbitrary and we shouldn’t even bother arguing whether it’s a lot or a little.

Separately, it’s weird that a joint account is insured to 500K but a business account stays at 250K. It actually does weirdly favor wealthy individuals vs. working capital accounts for businesses that might represent many employees.

It was set to 250k from 100k… That’s quite far from ‘never adjusted’ and quite a bit more than ‘for inflation’.

The sentence clearly means that it was never adjusted from inflation from when it was adjusted to 250K, 12 years ago. You can tell that this is far from being adjusted for inflation since it is now 100K off from what it was in 2010, or 40%. This should be a "neutral" issue with respect to the SVB thing, pegging it to inflation helps everyone in the system.

That's more than most American will ever have in savings, no less

That’s a senior software Eng in LA’s annual salary. With five years of experience.

Yeah, that's actually about what I make but let's be real, this is a very small number of people. I have a financial planner.

Are there people in this asset class who aren't getting financial advice? Yes. But it's not like ma and pa kettle are getting wrung out by the savings and loan here.

It is more than the average lifetime peak retirement savings in the US (which will be in multiple accounts, generally).

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