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The Fed's Playbook for Fighting Bank Panics, Now vs. The Great Depression | Dr. Jane Knodell

Forward Guidance

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The Importance of Deposits in Banking

Right now people who have the liabilities of banks, they have a different stack of who gets paid first. Right, so that's super interesting. I didn't notice that in the 19th century to a great degree that was the opposite where if you had a owned a bond of the bank or a note of the bank, that could be guaranteed but not deposits. And that's why you had all these bank runs. Yes, just the notes were guaranteed, not the bonds, not the banks. It was thought that people that use currency on average were less well educated, lower income and they needed protection.

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