roenxi: "This is a terrible idea" ttfkam: "You literally just described everyone who has a bank account." In some sense, well spotted. That is why I think the

roenxi: "This is a terrible idea" ttfkam: "You literally just described everyone who has a bank account." In some sense, well spotted. That is why I think the system is a bit cooked. People can't just put hand their money over to one institution, ignore what is done with it and expect to get a good outcome. This is a good way to get vast capital misallocations and, eventually, a lot of people ending up poor. More people than the alternative of the occasional bank run. I can see an argument for setting up full-reserve banks. But if people are going to lend their money to institutions that on-lend it, we should be seeing banking institutes get rolled up regularly and depositors losing at least some of their money. People shouldn't be allowed to ignore what is done with their money; it leads to some of the worst incentives in the modern economy. But technically no, some people have their money spread over a few institutions. And most people don't seem to have cash savings these days anyway (which is rational given the inflation regime).