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> If it never existed, then FTX was operating more like a bank - dollars only work because they have a paper trail and we can keep printing new ones. Try cashing out your savings, you might be able to. Now try everyone cashing out - there is no money for it.

Of course there is money in a bank run on an otherwise solvent bank. The Fed steps in and either lends the money in exchange for its pound of flesh, or takes over and makes depositors whole, up to the FDIC limits.

The fact that the Fed CAN do this, combined with bank regulations such as reserve requirements, is why it doesn’t need to do this very often.

Banks are explicit that they borrow short and lend long. It’s not that the money isn’t there, it’s just a mismatch in liquidity/duration. For FTX, the assets themselves were bad, never mind the liquidity.

Also, if we assume a bank run and you cash out dollar bills then you are technically banking with the Fed which means the Fed can lend that money back to the commercial bank. Deposits aren't needed to run a bank. They are needed to compete with lower interest rates against other banks.

> Which might be what he's looking for i.e. a bailout via printed money, which would allow investors to withdraw funds and OFC send inflation sky high...

They tried to do the equivalent by minting more of their in-house coin "FTT", right? Both after the bankruptcy filing, but I saw one analysis posted on HN suggest they had been doing that on an ongoing basis as part of their operations too, trying to cover shortfalls by simply minting FTT and calling that collateral for loans or what you have.

It just... didn't work.

Wire card is a good example how a financial company fails even though there was no reason for it. They could have just collected money and ran their business but for some motivated individuals that isn't enough.