Post #4095090
2026-07-25 10:47 UTC
Collateralization - backing loans with legally binding promises to surrender some asset if you default - is a way to *reduce* risk, but it can't eliminate it. Assets degrade: houses burn, cars get totaled, jewelry is stolen. Assets also devalue: a loan backed by bitcoin at $111,000 on the eve of Trump's election will be underwater today with bitcoin at $64,000.
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Replies (1)
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@pluralistic@mamot.fr 2026-07-25 10:47
This devaluation can also occur when your house's value plummets because Elon Musk repeatedly bombs your neighborhood with flaming rocket debris, or when your Tesla's resale value collapses after Musk throws a string of Seig Heils on national television. The point being that risk mitigation is never risk *elimination*, but markets have a hard time distinguishing between the two. Partly that's because of risk *shifting*. 15/