Originally posted by aldo
Please help me to understand the bank bail in scenario.
My thoughts are as follows:
The Australian Bank Guarantee suggests that there is a deposit backing of up to 250k per deposit per institution.
What I am trying to rationalise is why the banks would need to steal depositors' money.
To give a hypothetical scenario. Let us assume that there is an average of 10k in banks for every person in Australia.
Many people with a lot more, many people with a lot less, businesses, institutions etc but let's say 10k
that is 25,000,000 (people) X 10,000 (dollars) = 250 billion dollars
Stolen from deposits; which the government gives back to you (supposedly).
Why wouldn't the government just give it directly to the banks and leave the deposits alone? Ultimately they will pay, so why attack deposits?
I imagine the government would just print and hyper-inflate to cover their obligations anyway, ultimately paying back a pittance on the actual value which was taken.
Thoughts anyone?
As Osi posted previously in the bond bubble thread, it may play out this way;
