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patio11's profile
Patrick McKenzie
Patrick McKenzie
Patrick McKenzie
@patio11

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Patrick McKenzie

@patio11

I work for the Internet, at @stripe, mostly on accelerating startups. Opinions here are my own.

東京都 Tokyo
kalzumeus.com
Joined February 2009

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    1. Jason Crawford‏ @jasoncrawford Feb 4
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      Thinking about bank runs. Prior to federal deposit insurance, why couldn't banks protect themselves from runs with explicit policies? Like, “if our deposits drop by more than X% in Y timeframe, we will automatically halt withdrawals.” Did any banks ever try this?

      13 replies 1 retweet 27 likes
      Show this thread
    2. Patrick McKenzie‏ @patio11 Feb 4
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      Replying to @jasoncrawford

      There was a consortium that would suspend convertibility and issue certificates. Will try to find the book cite for you later. It was a consortium because panics tended to spread, both because of customer perception all banks were at risk and because banks pulled deposits.

      2 replies 1 retweet 9 likes
    3. Patrick McKenzie‏ @patio11 Feb 4
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      Replying to @patio11 @jasoncrawford

      Suspend convertibility = “At start of business on Monday, we no longer accept withdrawals to currency. We will issue you a certificate entitling you to payback from any member of the consortium at some indefinite point in future; if you need cash, sell it at a discount to anyone”

      1 reply 0 retweets 5 likes
    4. Patrick McKenzie‏ @patio11 Feb 4
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      Replying to @patio11 @jasoncrawford

      Slapped by the Invisible Hand, Gorton 2010.pic.twitter.com/73yI8o1vm2

      3 replies 0 retweets 10 likes
    5. Patrick McKenzie‏ @patio11 Feb 4
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      Replying to @patio11 @jasoncrawford

      It’s dry and disorganized but has been best meditation on the purpose and operations of deposit-taking institutions and the parallels to shadow banking which I’ve ever read. (Thesis of book is basically 2007 was a banking crisis on the repo market rather than usual diagnosis.)

      2 replies 0 retweets 7 likes
    6. Jason Crawford‏ @jasoncrawford Feb 4
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      Replying to @patio11

      Well my whole job right now is basically to read three dry and disorganized books and distill them into one clear and engaging ~4k-word blog post, rinse & repeat…

      4 replies 0 retweets 4 likes
      Patrick McKenzie‏ @patio11 Feb 4
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      Replying to @jasoncrawford

      Best concept that I’ve taken away is “Information-insensitive debt.” I.e. If you loan me $X00k to buy a house then you have to care about updates to my ability to repay, but if you deposit $X00k with Resona, you don’t. Resona’s service to depositors isn’t just risk smoothing.

      7:34 PM - 4 Feb 2020
      • 5 Likes
      • Keeks Vikram Bath1 Dan Grover Jason Crawford
      2 replies 0 retweets 5 likes
        1. New conversation
        2. Jason Crawford‏ @jasoncrawford Feb 4
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          Replying to @patio11

          How is “information-insensitive” not just another way of saying “very low-risk”?

          1 reply 0 retweets 0 likes
        3. Patrick McKenzie‏ @patio11 Feb 4
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          Replying to @jasoncrawford

          Described at length and more coherently in the book, but there is a very difference from saying “I model patio11 as extremely low risk; T-bill plus 10 bps risk of default maybe” and “I can entirely ignore patio11’s situations.” When debt becomes suddenly info-sensitive CRISIS.

          0 replies 0 retweets 1 like
        4. End of conversation
        1. New conversation
        2. Patrick McKenzie‏ @patio11 Feb 4
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          Replying to @patio11 @jasoncrawford

          Lacking sleep at the moment but with API brain engaged the way I’d explain it is “Most money isn’t money, it is debts, and those debts have extremely material implementation details, but the service of banking wraps them in the money abstraction and protects you from details.”

          1 reply 1 retweet 7 likes
        3. Gabriel‏ @Conanbatt Feb 4
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          Replying to @patio11 @jasoncrawford

          This is a practical and product-driven definition,and the actual differences between money and debt are very confusing, nuanced and theoretical. Of course they become easier to understand when they are defaulted or inflated.

          1 reply 0 retweets 0 likes
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