forsmant
Member
- Joined
- Nov 20, 2007
- Messages
- 3,456
I don't know what happened to the original thread.
Bank runs do still happen. The amount of reserves banks actually hold in hard currency does not equally total deposits at that bank. There is only $820 billion in currency in circulation. Most of that is held outside of the United States. The total money supply as figured in M1 is $1.37 Trillion and M2 is $7.66 Trillion. (http://federalreserve.gov/releases/h6/Current/) That represents a large disparity. If people were to lose confidence in the banks and hold more currency in hand than usual the banks reserves would decrease. Their ability to multiply those reserves are lost and the money supply would decrease. That is what happened during the Great Depression. (page 298 THE AMERICAN MONETARY PICTURE of this PDF http://www.mises.org/rothbard/agd.pdf)
Bank Runs can happen electronically nowadays. This is what happened to Bear Sterns. Many large institutions that had deposits, usually greater than $100,000, withdrew their money electronically drastically decreasing the banks reserves to where it could not pay.
These were the last two major bank runs that were widely reported. Most banks that are smaller are just arranged to bought out by a larger bank when it becomes clear that they are unable to make good on their liabilities. The FDIC has assisted in the closing and selling of 2993 banks since 1980. http://www4.fdic.gov/HSOB/hsobRpt.asp is a list of bank failures since 1980. (takes a while to load)
Banks are also subject to currency drains when its depositors write a lot of checks and other banks redeem those checks. That is one reason the Federal Reserve was created, to help float the checks so a bank doesn't fail by giving all of its reserves to several other banks at the same time.
Those of you who doubt the effect of a large amount of people keeping their money out of banks should do a little more research into fractional reserve banking. Some good books are The Creature from Jekyll Island by G. Edward Griffin, The Case Against The Fed by Murray Rothbard, America's Great Depression by Murray Rothbard, The History of Money... by Murray Rothbard, and Mises.org and the Federal reserves websites.
I do not advocate a planned bank run. I believe that is illegal.
Bank runs do still happen. The amount of reserves banks actually hold in hard currency does not equally total deposits at that bank. There is only $820 billion in currency in circulation. Most of that is held outside of the United States. The total money supply as figured in M1 is $1.37 Trillion and M2 is $7.66 Trillion. (http://federalreserve.gov/releases/h6/Current/) That represents a large disparity. If people were to lose confidence in the banks and hold more currency in hand than usual the banks reserves would decrease. Their ability to multiply those reserves are lost and the money supply would decrease. That is what happened during the Great Depression. (page 298 THE AMERICAN MONETARY PICTURE of this PDF http://www.mises.org/rothbard/agd.pdf)
Bank Runs can happen electronically nowadays. This is what happened to Bear Sterns. Many large institutions that had deposits, usually greater than $100,000, withdrew their money electronically drastically decreasing the banks reserves to where it could not pay.
These were the last two major bank runs that were widely reported. Most banks that are smaller are just arranged to bought out by a larger bank when it becomes clear that they are unable to make good on their liabilities. The FDIC has assisted in the closing and selling of 2993 banks since 1980. http://www4.fdic.gov/HSOB/hsobRpt.asp is a list of bank failures since 1980. (takes a while to load)
Banks are also subject to currency drains when its depositors write a lot of checks and other banks redeem those checks. That is one reason the Federal Reserve was created, to help float the checks so a bank doesn't fail by giving all of its reserves to several other banks at the same time.
Those of you who doubt the effect of a large amount of people keeping their money out of banks should do a little more research into fractional reserve banking. Some good books are The Creature from Jekyll Island by G. Edward Griffin, The Case Against The Fed by Murray Rothbard, America's Great Depression by Murray Rothbard, The History of Money... by Murray Rothbard, and Mises.org and the Federal reserves websites.
I do not advocate a planned bank run. I believe that is illegal.
