How Banks Go Bust-Rothbard

Murray N. Rothbard

[The Case Against the Fed, Chapter 8, “Problems for the Fractional-Reserve Banker: Insolvency.” (Slightly edited for publication as a separate article.)]

“The ‘bank run,’ which shivers the timbers of every banker, is essentially a “populist” uprising by which the duped public, the depositors, demand the right to their own money. This process can and will break any bank subject to its power. Thus, suppose that an effective and convincing orator should go on television tomorrow, and urge the American public: “People of America, the banking system of this country is insolvent. ‘Your money’ is not in the bank vaults. They have less than 10 percent of your money on hand. People of America, get your money out of the banks now before it is too late!” If the people should now heed this advice en masse, the American banking system would be destroyed tomorrow.”