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The thing is, this white lie is what keeps confidence levels high, which is what prevents the run. By merely suggesting that a bank can fail, and that the FDIC
by chii 3y ago
The thing is, this white lie is what keeps confidence levels high, which is what prevents the run.
By merely suggesting that a bank can fail, and that the FDIC is not going to bail out high depositors, they paradoxically _cause_ the run. After all, the people who took the money out just merely redeposited it back elsewhere (that they trusted more).
The white lie is better than a loss of trust which lead to an actual problem. And the FDIC could actually lie without lying by putting in vague words and misdirect people - such as saying things like "if necessary". In fact, people in society today believe plenty of white lies already - what's one more?
- flagrant_taco 3y agoWhile I totally agree that is how the system is designed, that's also the fundamental issue I have with it. If we have such a fragile banking system that those in charge are expected to lie to us to keep people from seeing the fragility, we have to rethink the system. > In fact, people in society today believe plenty of white lies already - what's one more? That feels like a bit of a slippery slope, selling people on one lie shouldn't justify telling another. It also means first defining what a white lie is, and who gets to know the truth to decide whether it's acceptable or not.