Instead of individuals taking bank behavior into account like they did prior.

No, it doesn't.

They didn't take bank risk into account. That's why so many people lost everything.

It happened over and over again, but not since the FDIC

They couldn't when the government regulated the hell out of everything and the Fed took over.

They really shouldnt have bailed out the companies

They clearly didnt need it

I'm not defending the companies, but I am speaking up for depositors.

What didn't? Bank runs certainly happen. And before FDIC there was private insurance and banks would cover one another.

There's a difference between depositors and investors.

Yes, one is the hostage taker and the other is a hostage

But bank failures still happened and people were out their deposits

Depositors are screwed by government allowing FRB and making that standard. It is no longer on anyone's mind to understand what deposits are.

How many people know what FRB is?

How many people know that deposit accounts are investments?

I want my deposits to be zero risk. They don;t make any money anyway. They should be safe.

It's not zero risk

abbreviating the federal reserve board doesnt make it more spooky ya know

The Federal Reserve Board. Yes, I know what that it.

fractional reserve banking

not federal reserve board

The only way your deposits are going to be zero risk is if you have a bank that doesn't do loaning.

and that is how a bank makes its money.

Fractional Reserve Banking - the idea that banks don't have to just sit on deposits?

And if there was such a bank they would likely charge higher fees

Or provide no intrest whatsoever

No, that's not what fractional reserve banking is.

That is where the government plays a legitimate role

Well, I myself would be fine with dealing with a yearly subscription for a bank if they don't do loans.

I wish loan companies and banks were seperate.

Fractional reserve banking is a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal.

Providing a safety net of last resort for the price of regulating banks to prevent the need for taxpayers to pay out.

At least thats what Investopedia says

That's what I learned in school, @Blackhawk342

Admittedly, 30 years ago

Yes, which means that money is pyramid on itself.

And why bank runs are 1) possible and 2) so dangerous to those who participate in the system.

You deposit $10. A 10% ratio means they lend out $9 and keep $1.

Meaning there appears to be $19 in the market now but really only $10.

In the 1800's you had lots of competition in banking and note issuance which kept ratios in check.

After the Federal Reserve came about they monopolized that value.