Many banks in our banking system depend on a class of primarily men who, like children, cannot leave the cookie jar. They are frauds.
Banks fail because …
Banks are a very important part of our economic system. It is hard to believe, but banks create and destroy money with their actions, and it is an important feature of the type of economic system we have.
Depositors put money in the bank for three purposes. They put it there for safekeeping. Often as well, they want to make a small return for giving that bank the ability to make some money on their money. And the third is for the services the bank provides for orderly payments and other similar services.
When you put your money in a bank, it is not just locked into a vault. After all, the bank has employees, rent, and interest for depositors to pay. So the bank lends out your money to those who need loans who themselves would pay a reasonable interest.
If the bank cannot find enough borrowers, it would normally invest those dollars in short-term government securities so it would make some money on its excess cash to pay its bills and garner a fair profit.
That is how a banking system in a sane society should work. A run on banks would be unlikely, but having a quasi-nationalized banking system where the government covers it would, in effect, make runs on banks unlikely.
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