Back when people agreed that shiny rocks are a good medium of exchange and store of value, it made sense for them to pay banks to hold on to their money. It was

Back when people agreed that shiny rocks are a good medium of exchange and store of value, it made sense for them to pay banks to hold on to their money. It was impractical to hold large amounts of physical material under your mattress; it's a big theft risk, as well as just taking up room. So there was economic value in a specialized entity that would safeguard your wealth, i.e. a bank. And banks didn't have to speculate with their deposits, since they were already being paid to be custodians. Now that the medium of exchange and store of value is fiat currency that is digitally printed or burned by the Fed, it's the opposite. Most transactions happen with nothing physical changing hands. The marginal cost of a bank to take on more deposits is nothing. It's no longer natural for banks to be paid by depositors directly as custodians, which is why they have to make money elsewhere; as you said, leveraged (but regulated) speculation. We've decided that this is overall a good thing for society. > backed by an insurance program with $142 billion protecting $17 Trillion in deposits This part's kind of misleading, since it's not like all $17 trillion (or even some significant part of it) will leave the US banking system entirely. Almost all of it just goes from one bank to another. When too much leaves one particular bank at once, you get a bank run. But the system as a whole remains balanced, and there's no conceivable scenario where enough people will take money out of the banking system for it all to crumble. Where would the money go, under people's mattresses or other currencies?