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ovationman t1_iw5hrej wrote

Reply to comment by themagicbong in TIL JP Morgan bailed out banks in 1907 but a severe recession occured anyway. Nelson Aldrich, a powerful senator with close ties to Morgan, led a mission to Europe in 1908 to study the workings of the central banks in England, France and Germany. The Federal Reserve was created a short time later by mankls3

Are you sure the individual account holder who risked losing everything during a bank failure cared?

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themagicbong t1_iw5jz6k wrote

Yes, when they understood that central banks are responsible for sudden, huge swings in the market, and exist basically as a way to manipulate markets/prop up entire industries. Often this gives false signals and can lead to many things, such as ramping up in production to meet the new (fake) demand. Its not like you couldn't have protections for people without having an overarching central bank, separate from the govt, with total control over the monetary policy of the nation. Not to mention how easy it is for central banks to essentially redistribute wealth to themselves, while taking from everyone at the same time, in order to do said propping up I mentioned earlier, usually for political reasons.

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usrevenge t1_iw5jqx1 wrote

Banks failed because they loaned out all their money and people then demanded the money back like a Ponzi scheme.

Banks still do this but they are required to have insurance to protect customers from their failure which is what FDIC is that you see on banking commercials. This means if bank of America shits the bed every customer can get all of their money back as long as they had less than $250,000 deposited.

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ChevExpressMan t1_iw5ww5u wrote

What were the major causes of the Great Depression? Among the suggested causes of the Great Depression are: the stock market crash of 1929; the collapse of world trade due to the Smoot-Hawley Tariff; government policies; bank failures and panics; and the collapse of the money supply.

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