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Comment by jonfw | Hacker News Reader

> Banks can weather that without issue

citation definitely needed on that. I don't think the banking system is set up to see Billions of dollars in monthly revenue disappear every night. This could take ALL of the slack out of the system and would almost certainly prompt a run on the banks

Messing with the banking system to this extent is one of few conceivable ways you could see the USA have a total economic collapse

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Yes. See my comment in this same reply thread. It isn't the banks. It is the funds who invested in these AAA bonds backed by a very diverse CRE portfolio. Who owns these funds? Avg. Americans. Pensions/retirement/etc. They are already close to the breaking point with the forbearance. The fed/Fannie/Freddie will need to step up next, but that won't last long either.

So what is a layperson to do ? Should I take out the money now while it is still there?

There's no real way to hedge against a crisis - almost by definition, everything goes down in a crisis. But as Buffet says, be greedy when others are fearful; if anything now is the time to spend what you put aside in good times, and make the cheap but risky investments that other people don't dare to. (E.g. I just booked a holiday for next year at a huge discount, which is good for me and good for the economy - I get a good deal, the airline and the hotel get a chance to stave off bankruptcy. Of course I'm taking the risk of the airline or the hotel going bankrupt)

Stop worrying and let it ride. Don't listen to anonymous people on the internet that tell you the sky is falling. Stock up on pasta and canned goods if it makes you feel better, but you don't have to worry, everything will almost certainly be fine.

We're not at that point yet.

Once it's clear to everyone that we're there, it's too late though.

True, so just make sure you're one of the first few to panic.

Germany is doing it. You can get money to pay for the restaurant.

What you cant do :pay your own rent!

More people than you think are unable to... Because, well, most people spent there money instead of saving..

But if you look at like this : resturant barely passing bye (or freelancers or whatever) go out of business.

The rest can weather the storm with the help of the government.

What happens if/when the lender of last resort (i.e. central banks) goes down?

What happens if the scorekeepers run out of numbers?

Central banks are the originators of money, itself a socially and legally recognised measure and transactor of debts. There is no resource constraint on supply.

Trust may fall, inflation may occur, there may be too much money chasing too few goods and services. But it's largely axiomatic that a central bank cannot run out of money.

Regionally, some preferred currency may emerge, but given that a pandemic is literally everywhere, there are no regional banks which are entirely unaffected by the situation. (Some may be to a greater or lesser extent, and regional trust shifts might occur.)

But addressing your hypothetical; that's definitionally impossible:

A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a state or formal monetary union,[1] and oversees their commercial banking system. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in a financial crisis.

https://en.wikipedia.org/wiki/Central_bank

I'm aware, perhaps I should've been more clear. By "go down", I meant a loss of confidence in the nation's currency/debt.

We'll see some inflation. Savers will be worse off in real terms; retired people will have a worse time of things over the next few decades. But it's hard to imagine it getting completely out of control: there's no alternative, and no actual shortage of real goods, unless the pandemic reaches the point where it's actually limiting production of things like food, clothing and so on.

A Central Bank cannot go down, as long as its on good terms with the FED or ECB.

They wont go down. Everyone and his dogs know that things need to keep running until the pandemic finds an end.

When the end comes (for example a vaccine) yes, than things can get worse. And i suspect America will be hit really hard.

Why? All those small businesses will be gone.

Germany: the healthy ones will just reopen there doors.

Actually you need to provide citation for the idea that messing with the banking system would cause a total economic collapse.

Also, a bank run is probably the earliest, and most completely solved problem of financial problems. In the US with FDIC insurance, and the fact that the Fed has stepped in to bail banks out time and again, there is absolutely no reason to believe there would be a bank run.

Also, banks saw trillions of dollars of revenue disappear in the 2008 financial crisis. The disappearance of revenue wasn’t the issue. The suddenness with which it happened and the unexpected impact of non banking financial institutions was what caused damage.

Suddenness wouldn’t be an issue because it would have been something mandated by the government. And the non banking institutions are smaller, better understood and would have been far less of a problem this time.

Hey friend, you need to do your own research before demanding citations. You've made quite a few wrong or misinformed claims yourself. Much of what you're saying requires citation are just the basic assumptions that the current market economy runs on.

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