The circumstances of these crises are always different. But one of the common elements among all of them was a loss of confidence in banks.
People would realize that their bank wasn’t actually holding on to their money after all; or that the bank had taken their money and made stupid loans to bankrupt railroad companies on the other side of the country.
As long as people felt confident that their money was safe, the system functioned just fine. But as soon as there was any doubt, an epic crisis invariably ensued.
Candidly, not much has changed.
In more than a century, there has been practically ZERO evolution in banking. It’s the same con game, the same trickery as it’s always been.
According to its own financial statements, the government which ultimately guarantees the whole banking system is itself insolvent.
The central bank that presides over the banking system is borderline insolvent, again, according to its own financial statements.
And as for the banks themselves, many of them are still poorly capitalized and highly illiquid.
Source Sovereign Man
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