What is a bank run and what can cause it?

When the conviction of a bank's insolvency spreads among its customers, there is a bank run and a massive withdrawal of money from the bank.
Learn Austrian Economics in a fun way!
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Econ Clips is an economic blog. Our objective is teaching economics through easy to watch animated films. We talk about variety of subjects such as economy, finance, inflation, money, investing, monetary systems, financial markets, financial institutions, cental banks, wealth, financial crises and business cycles. If you want to know how the economy works and understand why it works this way - join us on econclips.com and learn Austrian Economics in a fun way!

[@seymagulnihalyildiz6488]

thanks, that was helpful!

[@Omer1996E.C]

EconClips is a blessing in disclosure

[@austinbyrd4164]

Disguise

[@Omer1996E.C]

@@austinbyrd4164 that's the opposite of what I meant

[@idoko327]

Thanks ., Very impressive videos

[@DiegoAguila-rb1gz]

Great explanation of the bank run itself, but what causes people to want to withdraw their funds en masse? Why all of the sudden lose confidence in the bank?

[@acem82]

And I'll add in that FDIC "insurance" creates a moral hazard. Banks no long really have to worry too much about risky investments because if it falls through, the depositors of $250,000 or less will be covered by the FDIC. Therefore, the banks make more risky investments than they otherwise would.
That will lead to disaster sooner or later.
As Hazlitt pointed out in "Economics in One Lesson", in any given policy/act/proposal, it is wrong to:
1 only look at the immediate consequences, and
2 looking at the consequences only for a particular group and neglect the whole.
Another way to put this is every economic policy has secondary consequences that often do the opposite of the intended effect of the policy.

[@marunio435]

Lorem ipsum? - XD.
Let someone pick me up from the floor.

[@carlc3903]

Please use a real humans voice!
Couldn’t watch more than 2 mins, that horrible monotone makes it unwatchable. 😢