To put it simply, the banking system essentially acts as a quasi-arm of the government, enabling the welfare state to function. The banks and the government have an implicit agreement that they will operate under the assumption that deposits are stable and, in exchange, the government will provide insurance against any potential volatility.

Throughout the past century, numerous financial crises have occurred, all of which could have been prevented by passing a simple law. This law could be as short as a single page and would simply state that customer deposits cannot be utilized to purchase assets. If a bank wants to use these funds in such a manner, they would need to enter into an agreement with the customer, similar to the relationship between Limited Partners (LPs) and General Partners (GPs) in a venture capital fund.

It is unlikely that such a law will ever be passed because it would have the potential to bring about the collapse of the nation-state as we know it. This is just the tip of the iceberg; as one delves deeper into the issue, they begin to realize that the government has largely transformed into a set of insurance programs.

If we examine the budgets of major Western governments, we can see that the overwhelming majority of their expenditures are directed towards insurance programs and interest payments. These programs encompass areas such as military spending, healthcare, pensions, unemployment/food assistance, and education.