[blunte]

This would be my take on it as well. However, a pile of government printed paper may not be worth much anyway in a worst case scenario.

[y-c-o-m-b]

This is what I'm pondering at the moment. First would be the issue that this announcement is going to cause panic withdrawals (if it hasn't already) which I would guess has its own negative side-effects. Then it makes me wonder if printed paper would be worthless in a worst-case scenario anyway.

Or is this going to turn into Greece where all banks will close or limit the amount that can be withdrawn.

What a shit-show this has become

EDIT: another thing to consider is where to store all this cash if you withdraw. For those that have 6 figs in cash sitting in their banks, exposing that large sum of money in physical form poses an enormous risk (e.g. natural disasters or accidents being a big one)

[mumblemumble]

True. It might dilute right quick if the banks get to start printing it, too. I suspect the Nash equilibrium may be for them to do so with reckless abandon.

One would hope that the Fed wouldn't actually allow that to happen. But how does one re-impose reserve requirements without causing even more problems?

It's like in that one song: "And I don't know why she swallowed the fly. Perhaps she'll die."

On the upside, I suppose we'll now get to have an empirical test to settle that age old debate over whether the number of people allowed to print money should be one or many. Pity Bitcoin's in such a shambles, so we can't with clean conscience make it a test among zero, one and many.

[gowld]

Banks don't print money. They give out depositors' money to borrowers. If those depositors all demand their money back, then the FDIC covers it, so the borrowers owe the governemnt (taxpayers) money. If they pay back, crisis averted. If they don't, then it's a wealth transfer from taxpayers to the people who borrowed the money and spent it on consmption or waste.