Quote Originally Posted by 'Suvega',index.php?page=Thread&postID=122263#post1 22263
B) Although the above is prbably smart for teh individual investor, everyone that removes theie money from a stressed bank is just causing a ripple affect.
1929/30/31 was makred by everyone trying to withdrawl there money from their bank, the bank entering bankruptcy. Rinse repeat x 3000.
A run on the bank is caused by enough people no longer having faith in the institution. The people who do not act get wiped out, thus creating a sudden need for people to all withdraw their money. Until we move away from a fractional reserve system that loans every deposit out 100:1, we will continue to have these problems in times of crisis. And probably rightfully so - institutions that are failing should not be institutions that are solvent simply because you "should keep your money there to avoid a run on the bank". Classic cartel, prisoner's dilemma, etc. And we know how those turn out.