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Because discussing laws to enable a bailout can trigger a bank run even if the fundamentals are sound?

It's the magic of fiat money - it's all a confidence trick so you have to maintain the confidence.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 10:10:00 AM EST
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I'm tempted to say "so what?" If the fundamentals are sound, a bank run would be a liquidity crisis, not a solvency crisis, right? So we'd have to provide liquidity (with strings attached, of course, but we're assuming that things are properly planned for ahead of time, right?). But that doesn't cost the taxpayers money or debase the currency, does it?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Oct 1st, 2008 at 10:44:04 AM EST
[ Parent ]


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