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> 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 ba
by nickelcitymario 8y ago
> 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.
- joshfraser 8y agoAnd 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.
- nickelcitymario 8y agoThank you. I shoulda just said "Venezuela", because it's the perfect modern example.
- bluquark 8y agoBank collapses happen during times of deflation. In that environment, printing money like crazy just returns the financial system to normal, low levels of inflation.
- shkkmo 8y agoVenezuela has more significant issues than "printing money like crazy"
- gamblor956 8y agoSmall 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.
- jellicle 8y agoThe USA can print as many dollar bills as needed, right? But Tether cannot.
- perl4ever 8y agoThe 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.