The Seen and the Unseen - hosted by Amit Varma cover image

Ep 323: SVB, Banking and the State of the Economy

The Seen and the Unseen - hosted by Amit Varma

CHAPTER

The Importance of Banking

A bank will never have the money that is deposited in it. That money is out. So inevitably, if everyone in a bank decides they're going to withdraw their money, the bank goes under because the money simply isn't there. Once a run starts, it happens really fast even before the modern age. And this can in a sense become contagious in the sense that it's not just about one bank. Because here there's a run in one particular bank, they might say, hey, let me take money out from my own bank and put it in a bigger bank or just take it out and keep the cash. Who knows? This in fact led to the massacre in the Great Depression

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