In the sense that Main Street may end up paying for Wall Street's mistakes again. It happened in southern Europe already this decade. If bond market liquidity dries up, the average consumer's uninsured deposits will take a hit. People start to horde cash and the economy suffers.
On paper, no. We're all insured by the FDIC/NCUA up to $250k per institution (or account? I forget). In reality, I think the systemic risk means everyone has deposits on the line as the FDIC can't cover multiple bank failures.
under what provision? pure discretion? has this ever been tested?
in 2008-2010 the FDIC got on the phone and brokered sales of smaller banks to large banks, specifically because they needed to do their part to stave off disaster with their thin credit line. Congress didn't ask them to do this, they just got on the phone because they had live capitalization ratio data.
The Venezuelan government can print money too.
I really doubt people who get the the face value money back while the value of the money plummets are going to be fooled.
How many people will like the price of petrol and iphones doubling overnight?
Yes, but if they print money then your $100k will be worth less than $100k. This is why I asked about value.
People saved to buy an apartment towards the end of the Soviet Union. When the Soviet Union collapsed they could barely afford a car for the saved money.
You don’t need for the financial system to collapse for inflation to eat into these deposits. Even target inflation (about 2%) eats these low yielding deposits over the long term. And the never ending increase of public debt will result in high inflation at one point. My point being that if you have $250k in savings, it probably shouldn’t sit and melt on a savings account.
Usually a bank run will involve people hoardong money, and run away inflation is caused by people spending money as quickly as they get it.(is a rapid increase in money velocity and the other a rapid decrease). So these two forces should counteract each other.
bail-in's don't burden public coffers and would target disdain at the 1 company that was overlevered, instead of politicians
are you referring to the safety of your deposits? because that is different than causing trouble for the financial system