Can the Federal Reserve Really Print Enough Money to Stem a Bank Run?

Treasury Secretary Mnuchin and his wife at money printing headquarters

Kevin K. emails:

In this article [Will Bank Runs Occur in the United States Over the Next Few Weeks?], you write "They do not want to see bank runs at this time" but with no mention of why (or link backing this up).  Also, how confident are you that money printing will succeed at propping up banks should there be a run?

Also, do you see any imminent martial law type measures to contain the virus? (and maybe maintain some sort of order during a potential full scale financial crisis)?

RW response:

Well, we know they are protecting the money market sector (SEE: Treasury Secretary Mnuchin Announces Plan to Back Up Money Market Funds) which is the equivalent of diving in ice water to save your dog.

If that is going to be done, you are on pretty sound footing to assume that the person who dives to save his dog will dive to save his child--the banking sector.

At its fundamental level, propping up banks means that if you have $10,000 in your bank account, the Fed can order (from the Treasury) $10,000 in newly printed bills to pay you. They can do this all day every day with the only restriction being the logistics of printing the stuff and getting it to different bank locations.

As far as martial law, these lockdowns and shelter in place orders are pretty much martial law-lite. That said, I believe we are probably now at peak authoritarian measures for this round of mad panic. From the comments I am seeing from chief administration fearmongers, it appears that they are about ready to dial back the off-the-wall claims about how deadly COVID-19 is.

The sadistic power freaks will be back but I think they are pretty much done with this particular experiment.








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