I guess, in some ways, but that's exactly what led to SVB's collapse. It's only safer in a declining or flat interest rate environment or when you use short duration treasuries. Otherwise, this exact strategy leaves you vulnerable to a bank run. See above. This investment strategy requires active risk management, and that means the same kind of regulation you're bristling at.
> I believe that fractional reserve banking based on fiat currency is inherently risky. However the state does not make it easy for me to avoid this. However it is possible for even the moderately wealthy person to take safe action to reduce such risk.
It's not really, fractional reserve is where money comes from. Money is created when debt is issued and it is destroyed as the debts are repaid. This is how interest rates control the money supply. As interest rates go up, repayments remain constant and originations drop, so the supply goes down. The M2 supply has shrunk about a trillion dollars over the last 8 months, and this is why.
It's weird to me how few people this seems intuitive for, and I only learned about it over the last few years.
The risk is basically zero for anyone under the FDIC limit, which is, substantially everyone. The average American can't rustle up $500 for an emergency expense, never mind $250K in un-invested cash. If you have more than $250-500K but less than $5.5M you can use a sweep account. If you have more than that, you can pay for private insurance.
Remember, nobody has lost a penny of FDIC insured funds in over 100 years, so why exactly do you think it's risky again?
> However it is possible for even the moderately wealthy person to take safe action to reduce such risk.
What do you mean exactly.