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Asset Markets as Banks | PHILOSOPHICAL ECONOMICS
Source: philosophicaleconomics.com
Article summary:
1. Keeping money in a bank is more convenient and can earn a higher return than keeping it in a safe, but there is risk associated with it.
2. The modern banking system has strengthened the network of confidence by providing government insurance on deposits and having a central bank to provide liquidity to solvent institutions.
3. Asset markets have parallels to banks, particularly in environments where short-term rates are expected to remain low over the long-term.
Article analysis:
The article provides an interesting perspective on asset markets as banks, particularly in terms of convenience and potential returns. However, there are some issues with the trustworthiness and reliability of the article that should be noted.
First, the article does not explore counterarguments or present both sides equally when discussing asset markets as banks. It only presents one side of the argument, which could lead readers to form biased opinions about this topic without considering other perspectives. Additionally, there is no evidence provided for some of the claims made in the article, such as when discussing how much people would be willing to pay for a share of the S&P 500 if they were stuck owning it forever. This lack of evidence makes it difficult for readers to assess whether or not these claims are accurate or reliable.
Furthermore, there is no mention of potential risks associated with asset markets as banks, such as market volatility or liquidity risk. These risks should be discussed so that readers can make informed decisions about their investments and understand all aspects of this topic before making any decisions related to asset markets as banks.
In conclusion, while this article provides an interesting perspective on asset markets as banks, its trustworthiness and reliability should be questioned due to its lack of evidence for certain claims made and its failure to explore counterarguments or present both sides equally when discussing this topic. Additionally, potential risks associated with asset markets as banks should also be discussed so that readers can make informed decisions about their investments before taking any action related to this topic.