Tuesday, April 6, 2010

Run on Greek Banks?

SEE HERE "Danger Will Robinson!" A run on banks is not a good thing since it tends to collapse the banks since banks don't keep money around in quantities necessary for all the customers to cash out. If large amounts of money are being transferred out of the country into harder assets then that likely weakens the currency in the country. Fiat currency is pretend money anyway. It depends for its value on the confidence of the people. When the people lose confidence the currency loses its exchangeability, essentially its value. That's the problem with fiat money, it has no intrinsic value. Hopefully Greece is not in such difficulty that the European Union won't shore up the dikes and keep it afloat. There is a lot to be said for moving into harder assets however.

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