It's A Wonderful Life bank run

A topical clip from 1946.

https://self-evident.org/?p=24

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[JoyGrenade]

Hey, what the hell you doin' with my money in your house, Fred?

[blabblab1212]

Good luck getting your F.D.I.C. insurance when the shit hits the fan! Better empty your safety deposit boxes too!

[WallStwizkid]

*of $8.3trill.

[WallStwizkid]

The most gold that has ever been mined is 142,000 metric tons. With an M2 money supply if $8.3trill. in the U.S. alone, it's already less than the value. There's also an uneven distribution of gold, so it would be more economically advantageous to countries like South Africa...we don't want that here in the U.S.

[WallStwizkid]

There was a few typos, not fixing it. Point is basic. Central banking needs leverage, it's been proven that the market doesn't just always clear into equilibrium by the market fairy, it needs to be navigated. Fixed exchanges limit that ability, bank runs would be impossible to get through. Not to mention we'd have to restrict applications in the metal, for it would have to be priced at ridiculous levels, like when M2 money supply in circulation and deposits are over $8.3trill.

[WallStwizkid]

During the gold standard, there was common "boom and bust" business cycles, and they were usually sharp. Any type of fixed exchange wouldn't have mattered, the great depression would've occurred regardless. Current monetary policy that's simply fiat currency not fixed, would've preventing the great depression, for the ability to lower bank reserve and expand would've been available.

[WallStwizkid]

Aggregate demand and aggregate supply are not instantly flexible to changes in money supply, and classical economic theories like the quantity of money have been proven inaccurate. It's money demand not money supply that has a more immediate effect on those rates. Quantity of money assumes all created money is transactional, ignoring savings, and that's not true.

[WallStwizkid]

When I say fixed exchanges, I'm not talking about just gold, but any commodity money. You don't need to back a currency with anything, it just limits the amount of leverage in the central banking system, that's necessary to navigate the economy. If you're minting silver coins or back notes with silver reserves, and shift in the money supply is going to result in a direct and proportionate change deflation or inflation rates.

[inkey2]

the paper currency could be also backed by silver as well...like our old silver certificates,

[WallStwizkid]

We would never be able to handle a bank run today if bank notes were receipts for gold reserves. It's impractical. The building and loan in this movie is actually different than full commercial banks, they had income limitations, and generally held savings deposits till a down payment was obtained, then offered loans. The depositors/borrowers had voting rights and financial decision power based on their shares. They were either run as mutual holdings or joint stock companies.