Does a Run on the Banks make any sense anymore?

Here's a little thought problem, because all money is "paper" and "printed at leisure" you really can't have a run on the banks in the traditional fashion of people needing money and trying to withdraw but no money being there.

All the banks would do is first rely upon an unfunded FDIC, then if need be borrow money from the FED at 0% interest to cover 100% of deposits?

This scenario would likely take place during inflation of consumer goods driving a need to remove deposits from bank reserves, but there is a lot more money in banks held by richer clients who won't need to withdraw so much? So what could cause a run on the banks of the wealthy?

I don't know what could legitimately cause a run on the banks that would really effect anything

But if such a run were to occur it would be a nightmare trap, because the FED thinking by inflating the money supply they could stave off the run, would only exacerbate the problem as suddenly the money supply hyperinflates and people would have more reason to run on the bank and put their money elsewhere?

That is to say the safeguards put in place prevent a run on the bank, but if there is a run on a bank, the safe guards act as automatic reactions which would destroy the economy like the automatic reactions of mobilization and timetables led to WW1.

Ahh, I just figured it out....

Banks reserves are largely deposited by businesses, not by individuals which make up a tiny share because individuals keep most money in markets, money mutual funds, or bonds etc.

So businesses must make up the lion share of bank deposits, and therefore would be the "primary runner" on the bank.

During the credit crunch of 2008, when businesses have a hard time getting credit, they must rely upon their cash savings held in banks. This is the "Run".

That is why interest rates were dropped so low and borrowing made so much easier. To prevent a run on the bank.

It has worked so far at the cost of a sluggish economy, because now Businesses can borrow again and not make a run on the banks.

But the problem is there isn't a lot of floors left to drop the interests rates down to, eventually we'll get to the bottom of 0% interest and then the only thing preventing a run on the bank is inflation.

I thought that the newest measures, (on paper at least) should mean that all banks now need to be able to cover something like a run on a bank, with adequate published reserves. Yes it is a tricky dicky, but at least should make banks, or rather their highest rankings pay more attention, and be on the ball to what is going on lower down.

I don't know what could legitimately cause a run on the banks that would really effect anything

A bank run will not stop the implementation of a global currency, which is right at our doorstep, and will likely be in place within our lifetimes.

The Banksters can certainly paper over trillions in bad loans and derivative exposure.

But, what they can't control is confidence.

Not even the magical printing press can mitigate a confidence collapse. Especially if the run is an honest effort at killing the banks.

reply to post by FreeMason


I don''t know why people do runs on banks in modern times. People are irrational.

Even in the case of an institution like Bear Stearns they just get bought out by the nearest competitor, as happened when Chase bought them.

Again people are irrational, in this fiat system there is no legitimate reason to take your money out of an institution as it could potentially lead to more harm and risk to your money than leaving it there...who knows?

It's not like when notes were redeemable in gold. In that case the first to run the bank came out on top.

The answer was already given to you if you were paying attention to Greece.

They will shut down the branches and allow only a very small amount to be withdrawn from ATMs like 100 dollars, or allow you to spend up to the same small amount from your debit card.

If you have a bunch of money in the bank you are completely at the mercy of the bank getting a bailout, or if you really have a lot or know the right people they might let you wire your money to another bank, hush hush.

CookieMonster09

I don't know what could legitimately cause a run on the banks that would really effect anything

A bank run will not stop the implementation of a global currency, which is right at our doorstep, and will likely be in place within our lifetimes.

Nope that's total BS. There is far too much money to make on the Foreign exchange markets for them to just suddenly cancel all currencies and just have one global currency.

There is like $4.5 trillion traded in FOREX EVERY SINGLE DAY. A lot of profit to be made. The bankers wont let anyone get a handle on that.

proximo
The answer was already given to you if you were paying attention to Greece.

They will shut down the branches and allow only a very small amount to be withdrawn from ATMs like 100 dollars, or allow you to spend up to the same small amount from your debit card.

If you have a bunch of money in the bank you are completely at the mercy of the bank getting a bailout, or if you really have a lot or know the right people they might let you wire your money to another bank, hush hush.

And don't forget Cyprus. Also allowed only limited withdraws (I think it was like $50) a day for several days. Enough to freak people out and then BAM, they get hit with the "Bail In" and bank account balances were shaved down.

Anyone that doesn't understand why bank runs happen, how they happen, and how to recognize that such a thing is happening, you need to figure it out real fast, sincerely. You also need to keep a little bit of cash. Just in case. Even if you only have a hundred bucks and you don't feel like it's much, it's better than 0!

No, a run on the banks makes no sense, to me anyway. They have these really cool things called a "drive thru teller" now. You can take your whole care and run it thru the bank! totally awesome! What's next, a space program? Machines tha play moving pictures and sound ? Women wearing pants? Voting as many times as we want, any time we wnat, and no one cares? What in the name of the Lone Ranger is going on here ? I want answers darn it !

But how would limited withdrawals effect a business unable to get day to day cash from credit?

proximo
The answer was already given to you if you were paying attention to Greece.

They will shut down the branches and allow only a very small amount to be withdrawn from ATMs like 100 dollars, or allow you to spend up to the same small amount from your debit card.

If you have a bunch of money in the bank you are completely at the mercy of the bank getting a bailout, or if you really have a lot or know the right people they might let you wire your money to another bank, hush hush.

I had almost given up on humanity until I read your post!

You are correct.

It is safe to say there will never be another run on a bank in our future.

Let me tell you how it will happen...

One day you will wake up, and you will find you can only withdraw a rationed portion of your money, The rest is at the mercy of the government's needs or those of the Bank or world bank.

I think it's even safe to say you will not see a crash on the market.

Let me tell you how it will happen...

One day you will wake up see a 4.3 loss across the board but the market will be closed until further notice.

I'm not even going to get into mutual, retirement funds and the 401k, if people are still in that game, well, all the best to ya.

The Rat.

Nope that's total BS. There is far too much money to make on the Foreign exchange markets for them to just suddenly cancel all currencies and just have one global currency. There is like $4.5 trillion traded in FOREX EVERY SINGLE DAY. A lot of profit to be made. The bankers wont let anyone get a handle on that.

It's not about profit. It's all about the centralization and consolidation of power in the hands of a few. Talk to me after the dollar collapses.

Just look at the consolidation of the banking system in general. Look at the consolidations in the private sector, where we now have literal monopolies in various private and public industries.

As Kissinger alluded to many years ago, we will have a global currency, a global government, and a global military whether you like it or not.

We are almost there, as most of the populace is already operating on a cashless basis with debit and credit cards, online banking, etc. Fewer and fewer business transactions are cash only nowadays.

reply to post by smurfy


it covers a run-type scenario but it still isnt enough for a doomsday type run. There is almost always a duration mismatch within a bank which means it wont have enough short-term liquidity should a run occur.

For anyone thinking a run cant happen, it can and it will. Think about it at an individual level, if you hear rumours that your bank is going under you will try and withdraw all that you can. Is it reasonable to think that many, if not most, will have similar thoughts? Yep. Hence run. It usually occurs before a bank even knows what is going on, and in the days of the internet it can happen literally in minutes if the conditions are right.

The whole idea of deposit guarantees is to try and stop runs, but if you figure you wont see your money for a while you'll still try and grab as much as you can.

reply to post by FreeMason


No it doesn't make sense.
Add to this they would probably know by the numbers who got what banknotes and the persons who dared ask for the money they earned would be put on yet another 'list'.

Perhaps the non-government 'producers' should start their own set of lists.
Paper pushers need not apply.