Thinking about bank runs. Prior to federal deposit insurance, why couldn't banks protect themselves from runs with explicit policies? Like, “if our deposits drop by more than X% in Y timeframe, we will automatically halt withdrawals.” Did any banks ever try this?
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This is a practical and product-driven definition,and the actual differences between money and debt are very confusing, nuanced and theoretical. Of course they become easier to understand when they are defaulted or inflated.
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In the case of issuing notes for deposits@and halt actual deposits its just increasing the availability of credit in a situation without confidence. Probably those papers would sell at a discount, which is to say the bank defaulted on its users.
End of conversation
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