A pro-bitcoin redditor is using an interesting and worthwhile fact to make an invalid argument.
The Nevada gaming commission stipulates that a casino must hold in reserves enough cash to cover every chip in play on its floor.
Meanwhile the Federal Reserve stipulates that banks must hold in reserves between 0% to 3% worth of cash to cover every deposit on its books.
Fucking casino chips are a safer place to store your wealth than banks.
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Is the fact correct? Yes, mostly. From a Vegas website:
There are also some helpful “look-up tables” that give you some definite figures: For example, if your gross gaming revenue is greater than $130 million, you need to have available $1,000 per .01-.50 and multi-denomination machine, plus $1,800 per $1 slot, and $5,000 each for slots of higher denomination. So you can see that there’s no set figure we can quote, but we can say this: Casinos have to have a whole heckuva lot more money on hand than banks.
All banks with more than $124.2 million on deposit must maintain a cash reserve of 10% of deposits. Banks with more than $16.3 million but less than $124.2 million must reserve 3% of all deposits. Banks with deposits of $16.3 million or less don’t have a reserve requirement — yes, small banks are allowed to hold 0% in reserve.
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It’s a strong fact. Banks SHOULD be required to have enough actual cash, or digital assets, to directly pay out ALL non-time-locked accounts (You can’t expect to withdraw a 2-year CD.) Fractional reserve is a terrible idea.
BUT: This fact obviously doesn’t mean you should use a casino as a bank. Casinos are designed to take and keep your money, not to hold it for later checks or withdrawals.
Later thought: CDs and other time-limited contracts disappeared after ZIRP in 2009. Since then all accounts in banks are ‘liquid’, which means all the deposits are runnable. Is this disappearance part of the current vulnerability? I’m sure some expert is saying this in obscure Economese jargon, but I haven’t heard it stated in English.
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