Guarantees merely shift trust to a further party, not remove it

Evidence

Principals who accept collateral or other security on futures transactions trust that the collateral will retain its value and will be collectible in the case of foreclosure, expectations that are not always satisfied (Sandler and Hertzberg 1985; Ingersoll 1985). Both trustees who buy insurance policies and principals who have been reassured by the ancillary insurance protection trust that the insurance company is properly capitalized and takes reasonable risks. Moreover, they presume that premiums are invested properly, free of the specter of misappropriation or self-dealing. There is no reason to be more trustful of fidelity-like insurance than of other insurance or, indeed, of any-other futures transaction. — Shapiro, Susan P., The Social Control of Impersonal Trust, 125

Categorization

• XREF: Connects to the reader’s Raskolnikov/Simmel analysis: institutional guards just relocate the third-party trust relation rather than abolishing the need for it. — connects to: Trustworthiness enforced only by contract threats is not genuine trust
• DEEPTHINKING: The insight that insurance/collateral does not remove trust but simply re-directs it to yet another agent — trust is irreducible and infinitely regressible — is conceptually dense and generalizes far beyond finance.

Related

• Insurance and collateral fail as trust substitutes because they themselves demand trust. (similarity 0.83)

Broader Connections

• Trustworthiness enforced only by contract threats is not genuine trust #contradicts (0.75)