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I agree that no one really knows. My reasons are a little different. Look at what happens when there is a run on a bank. If the bank is insured, then some other

I agree that no one really knows. My reasons are a little different. Look at what happens when there is a run on a bank. If the bank is insured, then some other bigger entity says they will pay all the IOU's. Either they actually pay the IOU's off, or the panic stops, or some combination. But what happens when there is a run on the central bank of a country? If another bigger country (example Germany) bails out a smaller country (example Greece), then the panic stops. If no other country steps in, the currency becomes worthless (example Zimbabwe). But what happens when there is a run on the largest central bank in the world (United States)? A bank so big that no other country can possibly bail them out, even if they wanted to? What happens when there is a run on the reserve currency of the world? No one knows. It never happened before. Also, what set of conditions will cause this run on the reserve currency? People have a lot of educated guesses, but because it has never happened in the past, there is no scientific data available on what does and what doesn't cause it. No one knows.

dalbasal 6y ago
Germany bailing out Greece was and is a myth. Germany (actually the ECB and IMF) bailed out (mostly) German bondholders by assuming Greek national debt. In the process, they crashed the Greek economy even worse. It didn't help that Greece had just elected a extremist government to replace the corrupt one they had before. But all told, Greeks paid the price, not germans. The German bailout is populist rhetoric, and untrue. In any case, every major monetary event is unique so "never happened before" is always true. That said, there have been many, many monetary collapses. The roman crisis of the 3rd century is a famous, empire-spanning one. The reason the gold standard was abandoned in 1971 was essentially a run on gold/dollars, the reserve currency of the world.

dalbasal 6y ago

Germany bailing out Greece was and is a myth. Germany (actually the ECB and IMF) bailed out (mostly) German bondholders by assuming Greek national debt. In the process, they crashed the Greek economy even worse. It didn't help that Greece had just elected a extremist government to replace the corrupt one they had before. But all told, Greeks paid the price, not germans. The German bailout is populist rhetoric, and untrue. In any case, every major monetary event is unique so "never happened before" is always true. That said, there have been many, many monetary collapses. The roman crisis of the 3rd century is a famous, empire-spanning one. The reason the gold standard was abandoned in 1971 was essentially a run on gold/dollars, the reserve currency of the world.