Epicycles in a geocentric model of the solar system is another way of looking at planetary motion. It breaks down due to the required addition of complexity to explain discrepancies between the model and truth, which is the same for this particular situation. In addition to what the CPA said, how does this model work with callable, putable, or floating rate bonds where the interest payment is not known up front?
I understand there's a reason why accountants do things the way they do. But hacking is about looking at things differently. To use your analogy, one can definitely gain insight into planetary motion from a geocentric model even if it's not the best model for all purposes.
Generally speaking, "hacking" is about thinking things in a different way that is generally better or at least more useful in a certain situation. The author's explanation is strictly worse.
It's just another confident fool spouting off about a topic they don't understand. The article is 90% trash.
No it isn’t! The headline they used is “Protecting Our Customers - Standing Up to Extortionists.” My issue with it is that they word their announcement in a way that leads people to congratulate them instead of saying we’re sorry for leaking your private information. I’m so angry at them over this.
Additionally the email they sent me had the subject “important notice” and that my personal account was affected as the third sentence in a rather wordy paragraph. None of this is ok and this is not a company taking this seriously.
The pagers were designed as explosive devices and specifically marketed to Hisbollah leaders, with fake justifications for the added weight from the explosives.
In contrast, no iPhone teardown has shown any explosives, and Apple still has a reputation for saving weight wherever possible.
If you have an iPhone that mysteriously has only a fraction of the battery capacity of a normal iPhone it might be time to worry if you have the Mossad version with inbuilt explosives. But otherwise I wouldn't worry too much. A battery explosion would be inconvenient but much less effective
> with fake justifications for the added weight from the explosives.
There was negligible weight increase, as the battery was significantly shrunk to allow hiding the explosive inside [1].
> At some point, Hezbollah noticed the battery was draining faster than expected, the Lebanese source said. However, the issue did not appear to raise major security concerns - the group was still handing its members the pagers hours before the attack.
A recall is a formal process for addressing a safety issue. It doesn't matter whether the safety issue is caused by hardware, software, or literally even a single line of text in an owners manual.
Unlike Tesla, all other manufacturers ask car owners to bring their cars to local dealerships to update firmware or even do any mechanical changes. That's what "recall" is in the auto industry: schedule an appointment; take a day off; drop off a car; come back home (either uber/lyft or dealer provided cab); wait for a call from the dealership; then, pick up your car after everything is fixed according to recall.
Compare the above with Tesla's "over-the-air" software updates for recall. So much better, even if one doesn't like Tesla vehicles or Musk.
That is not true. Other automakers also have OTA updates, even e.g. Chevy trucks [0]. And some safety fixes can be mailed to customers to DIY. I did one on my Honda -- there was a typo in the owners manual on a safety critical statement. Honda mailed me a sticker and told me where to place it.
Every time there is yet another "recall" that turns out to be an automatic software update, I shudder at the idea of putting my life directly in the hands of "move fast and break everything" web culture.
Continuously updating software is a terrible dynamic, especially for things that you want to be tools that just work. It discourages companies from doing QA/reliability engineering in lieu of a culture where could-have-been-foreseen bugs can just be discovered and fixed later. It makes it so that "owners" cannot trust their machines/systems to just keep working predictably, and have to accept whatever third party whims may dictate at a moment's notice. And generally such schemes result in hostile software that works against users - eg surveillance that serves the interests of the manufacturer.
For most software-related recalls, the most hassle I ever had was a service tech telling me that they updated my firmware during an oil change. So, in practice, it really was never that much of a hassle.
That's admittedly not much of an option for Teslas...
You're ignoring the difference in the Tesla update being pushed out to cars immediately, while the other manufacturer's update waited until you happened to bring your car in for servicing. How many miles did you continue to drive a car after it was deemed in some way unsafe enough for a recall?
From what I remember, I don't recall a software update recall being deemed unsafe enough to stop my from using a car. I don't recall any physical recalls being deemed unsafe enough to stop me from using a car. Taking care of small recalls during a quarterly or semi-annual check up was perfectly fine. I think I only ever had one recall that required an immediate appointment to get fixed, and I think that had something to do with wiring.
The media tends to make more of an issue with Tesla recalls than other car companies -- especially for these relatively minor updates. I think the original article here is one of those articles.
Tesla doesn't even push out recall updates immediately to all cars. There's a controlled and orderly distribution. The fact that it's OTA is nice, but it's honestly not that different from a practical point of view. (Again, for software updates).
What I can't stand are Tesla OTA updates that break functionality. A year or so ago, they pushed an update for the auto windshield wipers that made mine operate worse. That was a safety hazard, but they have gotten better (but still not "good"). But every time my Model 3 updates, I'm scared of what's going to get changed. Sometimes the updates are good (I'm happy to have SiriusXM streaming), sometimes frivolous.
The specific example that other user gave clearly did not have OTA updates.
But like EVs in general, the industry wide move to more OTA updates was in large part due to the competition that Tesla presented forcing the rest of the industry to keep up.
Maybe not recalls specifically, but the continued improvement of Tesla's software even after purchase is absolutely a selling point of their cars, especially in the era before widespread Android Auto and CarPlay when the software in cars was almost universally awful.
At least, as long as they actually are improvements. Not every OTA has been well received by owners. I don't have a problem with OTAs for bug fixes, but I'm personally weary about OTAs that change features. Tesla's tendency to treat their OTAs like their cars are an agile software project is not to my personal taste.
CarPlay has been around long enough, does get OTA updates, and I personally prefer that model because it is strictly scoped to the infotainment, and won't change the way my windshield wipers work.
It is funny how Tesla fans' and critics' philosophy on which definitions to use depends entirely on the topic being discussed.
For the Tesla fan, the colloquial definition of "recall" is what we should go by because the car doesn't actually have to return anywhere. Meanwhile, when it comes to "autopilot", they want us to use the technical definition of a system that is not entirely autonomous to the point that a pilot isn't needed.
Tesla critics on the other hand will reverse those two, claiming it is the technical definition of "recall" and the colloquial definition of "autopilot" that matter the most.
Except recall has a specific regulatory definition in the US. Whether or not a physical recall is required is completely irrelevant to something being labelled a recall. A recall is simply a defect that has a safety impact and the manufacture is required to notify owners and provide a fix. Problems that can be resolved via OTA updates can still qualify as recalls.
Autopilot has no such formal definition (at least not in the context of cars). Musk/Tesla have continually over-sold what their various iterations of autopilot (Autopilot, FSD, etc) can do AND also fall back to "it's an autopilot just like a boat or plane" which completely ignores that boats or planes aren't typically operated on busy highways by untrained pilots.
Yes, this is a perfect example of what I'm talking about.
A Tesla fan could also give you an equally logical explanation about how the "regulatory definition" of "recall" is outdated because it is from an era in which all recalls were physical or that the general public's misconceptions about autopilots for boats and planes are not Tesla's fault.
My point was not that either side of these debates is right or wrong. It is that people are transparently starting with a conclusion and working backwards to justify it rather than having any consistent principle underlying their belief on this issue. It is pointless to debate whether definitions are or are not important when the actual issue being debated here is whether Tesla is good or bad.
It is funny that I ended my last comment with the following: "It is pointless to debate whether definitions are or are not important when the actual issue being debated here is whether Tesla is good or bad." and you're seemingly still trying to engage me in a debate on the definitions of these words. Just say you don't like Tesla and move on.
Some, but perhaps not all, car companies tend to be less than friendly with recalls. My Porsche has never had fewer than three recalls and they really turn the screws on owners. My Taycan has faulty brake lines that have been ordered but magically not found when I bring my car in for the recall repair. This has happened three times. The working theory from owners is the brake lines are ending up in Certified Preowned Cars since they can’t sell them without the parts.
Usually by the time the NHTSA has them send a second notice the parts magically appear in stock. The same has been true for the NEMA 14-50 plug recall (Running 40A over 10AWG wire - setting walls on fire, melting outlets, melting plugs) and a few others.
Porsche has been reasonably good about software fixes, presumably since they don’t cost as much money. They are not great at applying them and not much is done OTA.
Until they do a nicer job here we hopefully will see the NHTSA continue to broadcast these recalls and embarrass these companies into action. When you have issues getting things fixed you can complain to the NHTSA and they do follow up.
> the historical context of what a car recall was.
Maybe if you're only familiar with high profile recalls that have been covered in the news. Automakers have issued fixes that are DIY or fixed in the field for basically the entire history of automotive recalls. For example: misprinted owners manuals shipped to vehicle owners.
> This is only because they still haven't bothered to update
I'd argue the opposite. As cars are largely and increasingly controlled by software, these issues have as much if not more effect than a lot of mechanical recalls.
It's honestly a bit forward-thinking that given this software fixes are also classified as recalls.
They update by interpreting new situations with logical extensions of the existing rules.
NHTSA can order a "recall" for a safety defect, would people prefer they say that car makers can't satisfy a "recall" order except by returning the car to the location it was built?
It lends credence to how severe the language needs to be. A car recall is very serious and implies people need to take action. A software update is meh, I’ll look at that later. Seemingly a Tesla software update is more aligned aligned with “recall - update your stuff” rather than “update - do this whenever”
I've had several cars subject to recall and every one of them was "go ahead and bring it into the dealer whenever, show them this notice and they'll fix it". I imagine there could be some "drop everything and get this fixed right now" issues but I think the idea that every recall is a drop everything issue is more in alignment with your intuition than the reality on the ground.
A car with an active recall is in violation of FMVSS and can't legally be sold by dealerships (or the manufacturer) until the recall is fixed. It's very much a "drop everything" issue for regulated parties in the automotive space. It's only as a consumer that you get to take your time and deal with it whenever, which I think is a very reasonable tradeoff.
Phones certainly have distracted plenty of people going 70mph... some of those distractions have been fatal. I would imagine scant few of those distractions had been due to security breaches, but probably not zero.
We could imagine a following scenario: a clever virus spreads via zero day exploit to every iphone. The virus uses accelerometer to detect velocity over 70mph and initiates a bedlam protocol a minute after that. Your phone starts blaring maximally offensive content at max volume, controls are locked. Particularly effective when connected to car speakers.
The scenario is highly improbable, but there is a vector for a phone security flaw to be extremely impactful.
Sure it can, if the overcharge protection built into the battery malfunctions for some reason. There is speculation that a battery overcharge bug was fixed in a recent update issued to old Pixels.
You'd be surprised how many phones are involved with car accidents though.
The issue here is with the word recall, which is slightly alarmist This is a bit of a non-event for owners and they'll get a completely routine over the air firmware upgrade soonish with some mandated changes. No dealers are involved. Just a simple update.
Somehow a lot of these recalls are limited to the US only. Which raises a few questions of course about the rest of the world and what Tesla is doing there. I think it's just the language and the processes of the NHTSA that result in this clickbaity reporting. Also a lot of cars ship without over the air update capabilities. What happens with recalls for those?
For example, when the wheels may come off in a Toyota (NHTSA 23V432000), it's somehow less news worthy than when it is about a Tesla. That one got a "do not drive" advice along with the recall BTW, as you'd hope. It only affected a few hundred cars fortunately. But I bet more care owners and mechanics did work to double check they weren't affected. That happened 2 years ago. Not all recalls are similarly scary, of course. Most are quite boring actually. Especially Tesla ones.
There's a helpful tool (https://datahub.transportation.gov/stories/s/NHTSA-Recalls-b...) that allows you to slice and dice recall data by manufacturer. There are a lot of recalls. The vast majority are real recalls involving component replacements from car manufacturers that are mostly not Tesla. Tesla seems to be able to address their issues via software mostly. By the numbers, maybe be careful with Ford, GM, or Toyota. Lots of recalls for those. Parts falling of causing crashes. Electrical failures resulting in drive train failure mid drive. You know, minor issues like that. Totally not worth reporting on hacker news because it doesn't involve Tesla or Elon Musk.
This also raises a few interesting questions about the software quality of other manufacturers. Apparently they ship bug free software (try explaining that to VW owners) or their software is just not getting a lot of scrutiny. Is Ford really that good at software or updating it? Or maybe the NHTSA is a bit selective with their scrutiny here? On a positive note, really nice of them to do free QA for Tesla.
Recall is a specific legal notification that's required for non-compliance with US laws. Other countries have different processes, different terms, and different laws. Even when they are issued with the same terms for the same problem, they're generally less covered by news media. NHTSA doesn't require that manufacturers issue recall notices for other countries for obvious reasons. Some countries pay attention to US recalls and issue their own, like this recall issued by Germany [0] following the publication of a US recall [1].
There's no NHTSA conspiracy against Tesla. If anything, they're overly lenient on Tesla compared to other manufacturers.
Think of it as the opportunity cost. If interest rates are high, I can go out and buy a us gov't bond at x% risk free. This makes other investments that maybe looked attractive at lower interest rates less attractive now, and this is reflected in the lower npv value.
You asked what laws stopped them delivering mail to rural locations. You can't deliver mail anywhere, rural or otherwise, if you can't use the mailbox when you get there. That's the law you were asking about.
> Also the reference is what looks to be on some persons blog post.
The same laws I described, along with pricing. While the laws don't directly prohibit private delivery to those areas, they greatly reduce the economic incentive to do so by (1) prohibiting delivery to regular mailboxes and, (2) allowing USPS to charge such low rates so as to lose money on every delivery (no one can compete with that).
It’s a critical service. No one should be allowed to profit off of critical services.
Is there an argument to be made that a privatized version could run better? Not unless it gets to leverage people’s need of their mail next to its own greedy need for profit.
A solar sail doesn't work via aerodynamic lift. It works on conservation of momentum. Also, the biggest contributor to force on a solar sail is not solar wind, but radiation.
Right, radiation -- thank you. Nevertheless, you think that conservation of momentum is not the ultimate source of aerodynamic lift? It's not an electromagnetic phenomenon, obviously, neither gravitational -- so it has to be mechanical. Where that energy is otherwise coming from? Or are you claiming that aerodynamic lift is a fundamental force?
Energy can just as well be E = mgh (potential energy) or rotational energy E = 1/2Iw^2, or elastic energy E=1/2kx^2, chemical energy, nuclear energy etc. with momentum nowhere to be found in those formulas. When we talk about energy conservation we mean the conservation across all the forms of energy that the system can take on - that is what gets conserved.
It just happens that in one particular manifestation of the energy, the kinetic energy, can also be expressed with a squared momentum in the formula - but does not mean that momentum "is" energy by any interpretation.
As I said before momentum and energy are completely different concepts altogether - energy can be stored and transformed. Momentum cannot be stored nor can you transform a linear momentum into another kind of momentum.
If not convinced, consider for a moment (pun intended) that momentum is a vector and it conserves (in each dimension) as a vector! - whereas energy is a scalar and conserves as a scalar.
> does not mean that momentum "is" energy by any interpretation
I never said that. You literally said "momentum has nothing to do with energy", and I gave you one example where they are directly related.
> can you transform a linear momentum into another kind of momentum
Yes, you can. This is exactly why I mentioned yo-yo.
> momentum is a vector and ... energy is a scalar and conserves as a scalar.
That's a good point, it's 100% correct and I'm not arguing with that. But I insist that saying that they are unrelated is still wrong.
Let's go back for a second to where we started. My claim was (and still is) that the only source of aerodynamic lift is the kinetic energy of the air molecules acting on the airfoil. There is just nothing else, after all. This is not conceptually different from how [solar] sail works. Now, in this specific case, the energy of particles acting on the air/solar foil is directly related to their momenta.
Not sure what could be unclear there at all. Nuclear energy can be turned into any other energy and vice versa. As long as something has mass it has energy - whether or not we can readily transform that is beside the point.
Your recurring yo-yo example only demonstrates that you don't understand the physical phenomena in the first place. The linear momentum is conserved when the yo-yo pulls on your hand and through that your body, you are either pushing or pulling on Earth via gravitational force, the Earth wobbles opposite of the yo-yo (albeit infinitesimally, thankfully). That's the conservation of the momentum.
The rotational energy of the yo-yo has nothing to do with the linear momentum, that rotation comes from the chemical energy of your muscles that have first lifted, pulled or tossed the yo-yo. With that, you have transformed chemical energy stored in your muscles into the rotational energy of the yo-yo. Momentum has nothing to do with energy. Just because both exist and both get conserved. It is quite profound actually that they are not related at all.
As for this discussion we were talking about you conflating momentum with energy, a common misconception actually, your reticence of even remotely entertaining the idea that you did indeed misuse these concepts diverted into a lengthy discussion that slowly drifted away from the actual points to flawed analogies and yo-yos - also not surprising and a common predicament
Why am I still replying? Because it demonstrates why it is so hard to discuss flying (the very point of the original post) the majority of participants conflate and misuse scientific concepts - then go onto lengthy roundabouts to avoid owning up to these mistakes.
It feels that you've got some idea that I'm not understanding the difference between energy and momentum because it's a common misconception, and hold on it. I do understand that they are different. My objection is your insistence on them being "unrelated".
As of the yo-yo, let's remove the muscle power and the wobbling earth out of the picture and consider a it a closed system.
We've got a fully wound-up yo-yo, not rotating. It has a certain amount of potential energy. When you release it, its potential energy starts transforming into kinetic energy of linear motion and of rotation. This kinetic energy can be measured at any moment via observing the linear and rotational momenta of the yo-yo, which are the functions of its mass and torque, and the both velocities. Speaking of which, there is no other way of measuring the energy of this system. As it reaches the end of the line, and starts winding up again, its potential energy is zero, its kinetic energy is at its maximum, and its linear momentum changes the direction to upwards.
I'm telling you this to demonstrate that I understand the difference and your main objection is not exactly applicable here.
And, of course, momentum and kinetic and potential energy are intimately related in such a system. I don't understand how one could deny that.
> Momentum has nothing to do with energy
That's what I meant. Kinetic energy is a function of momentum and you are insisting it is not!
Perhaps we are being confused by each other's different ways of using the word Energy. When I use it (in the mechanical context), I mean strictly kinetic energy or potential energy, but nothing else. I've been taught to use it that way and was quite harshly slapped on the wrist (verbally) for failing to stick to it (that is, for magical thinking).
You seem to be using it in a broader sense (e.g. "nuclear energy". I don't know what nuclear energy is -- it s what multiplied by what, specifically?).
Correction: it will go up given an ignorably small jerk on the line at the lowest point. Not the best example, right... What I was trying to say is that one can trade rotational momentum to linear (and vice versa) as long as the kinetic energy of the system stays the same.
I imagine that, just like airlines use futures to hedge the price risk of jet fuel, they do the same for their vast logistics operation. They can lock in prices so they aren’t suddenly facing a massive bill if gas goes way up.
Not just fuel for their logistics, but also selling gasoline in their Wal-Mart brand gas stations near their stores, Neighborhood markets, and Sam's Club. They ditched Murphy USA a few years back for much of this fuel and began sourcing it themselves. It's a way to ensure those prices are the lowest they can reasonably offer and still turn a profit.
Hedging is extremely odd in that while it is thought of as a way to lock in 'certainty' on the price of something, it really is just another way of gambling on a price.
In the case of airlines, they are effectively 'short' oil, in that they profit if the price of oil falls, and lose if the price rises. So the usual story is that it makes sense to hedge their oil costs. They can do this in three main ways:
1) Buy oil forward. They get to lock in the price of oil at a future time. If oil prices rise, they win. But if oil prices fall, they lose out, since competitors can now buy oil more cheaply.
2) Buy a call option on oil. They get the right to buy oil at a fixed price at a future time. If oil prices rise, they can exercise the option, and win. If oil prices fall, they can just take the cheaper price => another win. But the option itself has a cost, so if oil prices don't change much, they lose out since they had to eat the cost of buying the option.
3) Sell a put option on oil. This is the airline being paid by someone for the option to sell them oil at a fixed price at a future time. In this case, the airline wins if oil prices don't move too much in any direction (since they get paid for the put option). If oil falls in price, they will have to buy it at the higher price => they lose. If the oil price rises, they also lose since the costs have risen.
Yet, in all cases, after hedging, the airline will still either win or lose depending upon the change in oil price. No certainty has been gained.
The choice whether to hedge or not is really down to game theory. What matters is not just whether/how your airline hedges, but what your competitors do.
> Yet, in all cases, after hedging, the airline will still either win or lose depending upon the change in oil price. No certainty has been gained.
That’s not really true. You’re locking in the price that you’re going to pay - that’s the certainty. You might however not be getting the best price at that point in time. From a financial forecasting perspective it probably worthwhile trade off though as you’re fixing one of your costs for that time period and that’s useful even when sub optimal.
There's still no certainty. For an airline, your prices have to be competitive. If you've locked in an oil price, and it turns out to be a high one, then your fares will be more expensive than your competitors (assuming that they didn't hedge in the same way). So the only certainty there is failure.
In all situations, hedging and non hedging, the oil price will determine whether you win or lose. There is no magical combination of derivatives that will ensure success. In fact, for every financial product you buy, you're paying a cost due to the margin that the bank/market charged you.
Hedging might make sense for some accounting/tax situations, but that's another issue entirely.
You are free to lose money by keeping the prices competitive, or lose money by raising your prices and losing business. Either way, it's the same result.
Airlines sell tickets in advance, so hedging will allow them to match their near-future fuel prices to the ticket prices they're selling now. They consume fuel but don't produce it, so I don't think they can fully balance things out over time internally.
edit: I see this was mentioned already in the thread.
> There's still no certainty. For an airline, your prices have to be competitive. If you've locked in an oil price, and it turns out to be a high one, then your fares will be more expensive than your competitors (assuming that they didn't hedge in the same way). So the only certainty there is failure.
A huge chunk of airline tickets are sold in advance. The oil futures can literally lock in the prices for only sold airfare if you're that paranoid.
Also (probably more important), the cost of oil on a given ticket is quite low and it would take a drastic change in oil prices for it to be obvious to customers comparison shopping.
> Hedging is extremely odd in that while it is thought of as a way to lock in 'certainty' on the price of something, it really is just another way of gambling on a price.
Actually, yours is a rather odd take on the term 'certainity' itself! To clarify, I'll lay out the layman take & the quant take.
The layman explanation is - life is a gamble but I wear seatbelt. Because that's the certainity I won't die by being thrown off the seat. Yes, that might mean I might die in other ways. Like maybe the car dives into a lake & I couldn't get out because the seatbelt is stuck so I drown to death. But the car in lake probability is smaller than car collision probability. So I have purchased certainity in my mortal affairs by wearing the seatbelt. Atleast if my car collides with another car, I don't get thrown off for certain.
The quant problem is the same. My quant professor at UChicago always insisted "only losers buy stocks". He repeated that in so many ways that lesson stuck to all of us. Like, stocks are for losers. Quants don't buy stock, losers do. Now why did he take such a radical stand ? Stocks are a random variable so there is no certainity. That's the very definition of positive rv y(t), it can do anything on the positive y axis, because it is random. But you are not completely helpless. You can buy certainity on both the x & the y axis! And on functions of those if you are clever. So if you pay put premium on a 1 month expiry with say strike at 1 sigma, you are saying I am only willing to lose 1 sigma from my present mu within next month. If my stock falls below mu-1sigma, then some other loser better pay up. Who is that other loser ? The guy who sold me the put option. Because he holds the opposite belief, which is why he sold me the put. So I am certain I won't lose below 1 sigma. I have literally purchased my certainity by paying that put premium. The loser why sold me the put is also certain it won't go below 1 sigma, which is why he gets to collect my premium. Now, what will really happen ? Well, who the fuck knows. The stock is a random variable, so anything can happen. But neither of us have bought the stock. I have bought 1 certainity, the seller has sold another certainity. So its a win-win on the certainity axis. Because my max loss is capped at mu minus one sigma, I am certain of that. So even though underlying is random I am certain!
> No certainty has been gained. is really down to game theory.
This is simply not true. A lot of certainity has been gained, which is literally why money has been exchanged. Price of certainity is by definition the premium.
Show me where the certainty is, then! In all cases (being unhedged, hedging against rising, falling, stationary or volatile prices), the airline can still be adversely affected by the future oil price. Either directly, or through becoming unable to compete profitably with rivals who did not hedge.
You can make an indirect bet on oil futures by trading airline stocks. Southwest Airlines (LUV) if it's going up, American Airlines (AAL) if it's going down.
I think the difference is that by the time an airline is buying fuel, they have already sold the tickets at a certain price. So hedging makes sense. That’s not the case with Walmart for produce - if tomatoes are more expensive to buy they can just sell them for more. The only things for which it makes sense are those that aren’t sold back, eg the fuel for their fleet of trucks etc
Yes, if gas prices doubled, Walmart could increase the price of their products, but consumers would likely buy a lot less, and Walmart sales would suffer.
Walmart’s focus is on “low, everyday prices”, and future can help maintain those.
There is absolutely no more reason to keep prices low if you've made a profit independently on futures than if you haven't.
Your marginal cost goes up in both cases. If you're optimising profits, you should make the same decision in both cases regardless of if you bought futures.
Accounting wise, the fact you made a profit on futures is unrelated to your current costs buying in the physical market.
Most likely the futures in question aren't being physically settled.
Regardless, the economic cost is what determines incentives to raise price for a rational actor. For my claim above to be wrong, Walmart and co would have to be irrational.
I’m totally ignorant about this part of the world, but I imagine they can only reliably sell them for more if someone else isn’t selling them for less. And if the someone else is hedging, they might.
It is different though. The FDIC would force the bank into receivership and return the insured money to account holders. That doesn’t exist for tether.
> The FDIC would force the bank into receivership and return the insured money to account holders.
Fair point. If a run-on-the-bank only occured at a single bank, that would work. And that's probably a more fair comparison to my example of everyone taking out their money at all the banks.
But for clarity, my statement was that the money to cover everyone's deposits at all the banks simply doesn't exist. The FDIC can only cover so much insured money before they just plain run out.
The paper currency doesn't exist. Why would you think the _money_ doesn't exist? As long as the banks aren't in fact fraudulent, the assets are there. I guess it's easy to trust in fraudulent banking if you have an unassailable belief that fake banks are the norm, but they're not. That's what people have spent thousands of years figuring out how to avoid.
And if the FDIC didn't have enough money, the government would start printing it like crazy and the US would start looking more like Venezuela in a very short period of time.
Bank collapses happen during times of deflation. In that environment, printing money like crazy just returns the financial system to normal, low levels of inflation.
Small amounts of inflation are a good thing. Deflation in a currency is almost always bad, and this is why limited-issue crypo like bitcoin will never replace real currencies.
No. The money would come from the federal deposit insurance program, which is funded by the banks, not the government. The money would also be recovered over time, when the bank’s loans become due and other assets are liquidated.
In general the money would come long before the FDIC get involved, because the role of the Fed (and other country equivalents) is ensuring that commercial banks can always borrow enough money to meet short term withdrawal requests if their loans aren't defaulting. Lending at n+x% because it can always borrow at currency at n% is a modern bank's business model.
Needless to say this is quite different from having a business model where you don't have any right to borrow money and claim to be backing it 1:1 with actual dollars, but it turns out that the bulk of the not-necessarily matching amount of actual dollars you have is lent out to some other shady operation...
