So, layoffs have come to the McArdle household, making this a depression by the most commonly accepted definition. The startup my housemate works for has gone out of business, and as we sat around last night talking about the financial implications of this, I pondered the Paradox of Thrift.
This is Keynes' famous argument that all spending is someone else's income. If we (hypothetically) decide to eliminate takeout from our menu and eat tuna sandwiches instead, we are saving money. But the restaurant loses it. By foregoing spending, we are pulling money out of the economy. This is the insight behind the liquidity trap--if everyone tries to hoard money by selling more goods and services while buying fewer, the total demand for goods and services will drop, and we will make ourselves worse off.
There's a problem with this crude, version, of course: it's only true if we hoard the money in the form of cash. If we put it in the bank and the bank lends it out, that money will be spent by whoever borrows it.
Now, in Keynes' time, this actually wasn't all that unreasonable. Lots of people did save money in the form of cash, especially after the big bank failures. Indeed, people who lived through the Great Depression often kept hoarding cash--my Grandmother once idly opened the teapot she was about to put in the church rummage sale bin, only to discover the $3,000 my grandfather had squirreled away there for a rainy day. And when you're dealing with an economy that largely skates along on cash, there are big delays in the translation of savings into lending. You have to physically put the cash in the bank. Someone else has to physically take it out. Then, after perhaps a delay of several weeks, they physically pay the contractor who upgraded their bathroom.
In the modern economy, of course, what happens is that we just leave the money in the bank longer than we otherwise would have. No delay. So what's the problem?
The problem is that the banks aren't lending. We're hoarding money, and they're hoarding it even more--they don't have to fix the transmission or buy antibiotics. So as in Keynes' example, the money really is just sitting there.
It's worth remembering that this is why the banks are at the heart of our problems. Even fixing underlying issues--like forcing write-downs of the home values securing recent mortgages--will not make them lend if they think they need higher capital to ride out potential storms. That's why even good liberals and Democrats are focused on rebuilding balance sheets, aka giving the banks free money.
Update: Sorry, let me be super clear that I still have a job. My housemate worked for a startup that got hit by the credit crunch.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
Megan,
Please don't say banks are not lending. That is like saying the automobile industry is not selling cars.
The reason banks are not lending is than many people (qualified borrowers) have curtailed borrowing.
Banks have tightened credit standards, but that had to happen, in order to ensure their long term survival
Mike
Of course, if you the Reaganite formulation of recession, depression and recovery... we'll never recover until Carter loses his job. He doesn't have one. We're screwed.
If the problem is that the banks have temporarily stopped lending, how can the solution be that the government needs to plow massive amounts into pork barrel spending and long term infrastructure investments?
Maybe what's going on is that people won't dig themselves even farther into debt, so the government has to do it for them.
True, the restaurant loses it. But the grocery store gains it, or at least part of it. The rest you keep. It's not "out of the economy".
Sympathies.
I was laid off a month or so ago, but severance won't run out for a few months. Fortunately I have a small business on the side and some consulting to keep things going, as well as my significant others' not insignificant income.
I have an increasingly common problem: my specialty is technical and rare enough that when I find an opportunity I am relatively likely to be the most qualified candidate, but by the same token such opportunities are relatively rare.
Thomas,
Except when you cook at home the labor that was cooking the meal and serving the meal is out of the economy
Culture 11?
And another piece of the puzzle to the housemate's identity is revealed.
uggghhh. I hope Fred G Sanford is wrong. I love Culture 11.
"Except when you cook at home the labor that was cooking the meal and serving the meal is out of the economy"
It's not exactly "out of the economy", it's just out of our counting of it. In other words, GDP doesn't measure everything, so things can move in and out of our estimates.
Ed Prescott has pointed out that aspects of our tax system, etc. can force us to do more things around the house ourselves (mow the lawn, hang pictures, etc.) when it would in fact be more efficient to hire someone else to do it.
Mike has already pointed out that "banks not lending" is a far oversimplification and not accurate.
So is confusing "building balance sheets" with "giving free money." One does not restructure a broken balance sheet by simply providing more cash. You need price discovery coupled with appropriate write downs, and in some cases bankrupcies to restructure balance sheets. That is true recapitalization.
Thinking that a politician is qualified to do price discovery is a bit like showing a hamster my checkbook and asking it if I can afford that new flatscreen tv or not. Good liberals and Democrats should realize that they cannot play banker and think it will have a different effect.
Oh, forgot. Saving *is* recapitalization. The "paradox of thrift" should be renamed "the short term contraction entailed by deleveraging." When looked at that way, it is not a bottomless pit, and requires no doomsday forecasts.
I believe a Keynesian would say that the take out business must reduce their savings by an amount equal to their lost income so the net savings in the economy is $0, even *if* the consumer deposits their money in the bank and the bank lends it out.
At least this is what I *think* I learned listening to the excellent podcasts at econtalk.org.
Mike, you sound like the nauseating CNBC anchors. Stop being so technical dude, you know full well what the statement implies. A SEVERE DECREASE in lending. And you know full well it's apt in its use 99% of the time.
You also know decreased qualified consumer borrowing follows the economy which follows the banks SEVERE DECREASE in lending. To argue otherwise (qualified borrowers are the reason the banks are not lending) is pretty silly. It's also pretty silly to argue a bank the size of JPM, BAC or WFC can survive long term only offering home loans to consumers with 50K in cash and 790 credit scores.
k1
ryanculver.blogspot.com
The only problem I see with that is that the people who are being too thrifty per the current unpleasantness live in China, not in the US like in the 30's. I think that needs to pointed out somewhere.
TallDave,
Ah, you are a journeyman center in the NBA.
Credit will contract, sooner or later. If something can't go on for ever, it doesn't. What we are seeing now is if the Fed and the Federal Government can hollow out the rest of the economy in one last futile effort to increase credit.
mind your beeswax Fred.
TallDave,
Ah, you are a journeyman center in the NBA.
Even better, his use of the construction "significant others' not insignificant income" implies that he has more than one significant other, which not only lends credence to your NBA guess but also reminds us not every advantage in life shows up on the 1040 long form.
It's also pretty silly to argue a bank the size of JPM, BAC or WFC can survive long term only offering home loans to consumers with 50K in cash and 790 credit scores.
It's also pretty silly to argue that JPM, BAC and WFC can survive long term by lending to people with 0K in cash, 500 credit scores and no verified income.
Even so, right now with 3.5% down, a 580 credit score and verified income you can buy a house with a FHA loan. The real stickler is that on verified incomes, home prices are too high. Unless we go back to no-doc loans and no regard for DTI ratios less dollar amounts of loans will go to houses.
Mike, I'm reasonably certain that banks are actually holding back capital from lending to build up reserves against the enormous pending but undisclosed or discussed losses. Increasing cash on hand now makes the books look better now AND prepares for the next dropping shoe. Particulary telling is that institutions don't trust each other, which would indicate they know what is ticking on their own books and assume it's ticking on everybody elses.
I am going with deep thrift precisely because I WANT the air to be let out of this "economy". Burn it down!
-rufus
This post suggests that the result of not spending is saving, but I'd suggest that in our current situation, the result is not saving, but not going further into debt.
Before we were spending money we didn't have. Now we are not spending money we don't have.
This is, of course, another way of repeating what a previous commenter said, its the borrowing, not the lending, that is being curtailed.
One could argue that one person's borrowing is just another's savings so the distinction doesn't matter, but this gets complicated once you starting talking about the international nature of modern economics. That saving might indeed be taking place, but it or the lending of it may not be taking place domestically.
Also, if your consumption habits are based on your perceived notion of your lifetime income, and that income was based in part on wealth you held in assets like stocks, the drop in asset prices would curtail your consumption. You're not suddenly "saving" that future income because it no longer exists.
There is no reason to think that just because consumption goes down, savings must go up. It takes quite a hearty "ceteris paribus" to make that true.
Megan, isn't the tuna sandwich example just a mirror image of the broken window fallacy? It would follow that, not only should we patronize the take-out place, but that we should buy even when we don't need it.
It seems to me that thrift in food-buying makes you better off financially. The people who produce the tuna are better off financially. The take-out folks are offering a product that you consider inferior (by whatever your personal criteria happen to be)
So really, you're just choosing a more beneficial exchange -- which maximizes "real" economic benefit.
If you get a raise, you may save and spend more. If you get laid off, you'll probably save and spend less. Savings and consumption often move in the same direction. There is no reason to think that consumption going down will automatically result in savings going up by an equal amount.
In basic macro theory, savings = investment. Your logic would imply that if consumption goes down, savings goes up (causing investment to go up). This would imply that consumption and investment are countercyclical when the every piece of empirical evidence shows that the opposite is true.
Nylund,
Maybe some of us are not spending money we don't have, but the Federal Gov, AKA the people of the United States of America is spending plenty of money we don't have.
In other words, we are spending money we don't have.
Right now banks and credit unions allow re-financing of mortgages (1st + credit line) up to 65% of market value, which means that consumers cannot refinance to a lower rate in most of the cases. Effectively, this means that banks do not lend money.
Please stop repeating that banks are not lending. They are lending a pile: just not throwing money at any fool that wants a house
and yes, you can refinance if you have an 80% LTV (not 65%!!) - you can do this easily and at ridiculously low rates. (It might be harder if you want to refinance 90% of the home's value or you have dodgy credit)
also, please stop repeating that banks have not written down the value of their bad assets - Megan has mentioned this several times. Banks have written down/off hundreds of billions of value of mortgages and securities. If all you know is what you read in the papers you believe that banks are still "hiding' losses, which is nonsense.
Eric,
Haha, I realized I'd misplaced the apostrophe after I posted, and wondered if anyone would catch that.
As long as she doesn't see it...
(looks over shoulder)
This isn't quite true, atleast according to my understanding of the Paradox. The idea is that the loss of income for the business owners will be replaced by a decrease in their savings.
Initial increase in saving = Decrease in income of business owners = Subsequent decrease in saving by business owners
The pool of money to be lent out never increases, and it actually decreases if the money in saved in cash form.
I have a problem with this "the banks aren't lending -- that's the heart of the problem" argument.
Here you go -- commercial banks, loans and leases, Dec 2008 -- $6780 billion, Aug 2009 -- $6966, now -- 7086. That's about 5% annual growth. And, securities held (other than treasury and agency, which everyone wants to hold), Dec 2008 -- $1296 b, Aug-- $1358, now -- $1471. That's 14%.
Now maybe you think that the banks should be the lenders that do the lending nobody else wants to do -- the lenders of last resort. But I don't see any real signs that that's what Washington wants.
Besides, what makes you so sure that borrowers want credit they can't get (borrowers with reasonable risk profiles, not the ones who got us in the mess we're in)? Do you know any such borrower?
I think I need to start buying teapots from church rummage sales.
The real stickler is that on verified incomes, home prices are too high. Unless we go back to no-doc loans and no regard for DTI ratios less dollar amounts of loans will go to houses.
The Dr. Housing Bubble blog has an entertaining feature, "Real Homes of Genius," that highlights recent house sales in California. Even at Ground Zero of the foreclosure crisis, houses are still hopelessly overpriced in terms of incomes.
"eliminate takeout from our menu and eat tuna sandwiches instead"
Just curios...does this have anything to do with spiffing up a Brittany? :)
"Just curios...does this have anything to do with spiffing up a Brittany? :)"
Haha. No haven't you heard, DABA's can't be that demanding anymore? Spiffing up a Brittany has been replaced with merely having a job and enough cash on hand to pay for dinner these days. Especially in New York.
Please stop repeating that banks are not lending. They are lending a pile: just not throwing money at any fool that wants a house
I have one friend who just got his house (and mortgage) and another who just got a car loan. Both are ordinary, middle-class folk. I keep hearing "banks aren't lending", but who aren't they lending to?
Banks loan depositor's money, not their capital. The capital is held in reserve to cover losses, buy other institutions, and to invest in assets which improve their business. Unfortunately, there are plenty losses to cover. The data yesterday recorded a significant increase in bank lending, mainly deriving from refinancings and from increased sales of existing homes...probably dominated by foreclosures. When we're done with heavy duty foreclosures, probably about three trillion dollars from now, things may return to 'normal'. I don't expect that 'normal' will include subprimes, Alt-A's, or NINJAs. It also isn't clear if ARMs should continue.
Several people have taken me a bit to task for my comments about banks lending money. So please allow me to give a little background for my remarks. I manage the forecasting process for a major bank. This bank, as well as others, knows full well that the TARP funds they received have at least two impacts on the balance sheet and income statement.
1.) They provided much need capital to allow banks to lend money.
2.) The rate on the TARP funds is, by today's standards, pretty high.
Every analysis I have done and seen suggests that the TARP funds are not accretive to earnings UNLESS the banks leverages it greatly for more loan growth.
So, the banks have a LOT of incentive to lend money. But, as people point out, loans on the balance sheet of banks is shrinking. The question then is why?
One reason is demand. There simply is just not enough loan demand from qualified customers in today's market to sop up the excess liquidity.
Another reason is higher credit standards. Banks got burned by lowering credit standards the last few years and are now paying the price. So what demand there is out there is being curtailed a bit by banks applying the reasonable expectation that they will be paid back.
So, let's please not demonize the banks for "sitting on excess liquidity." Banks would like nothing better than to loan money to quality customers right now. But as customers de-leverage their own personal and professional balance sheets, it might be awhile before loan demand picks up.
Mike
This isn't some psychological phenomenon, Megan. The reason that people are losing jobs is because we've come to a collective realization that our debtors can't pay off the debt -- the collective bill is due, and everyone's coming up short.
The USA has maxed out its credit card, and it's rice and beans time for all of us.
Refi's shrink the balance sheet on a specific basis.
Also, sorry to hear about your boyfriend's job loss. My life recently has had much to be desired, but at least I have a stable income and can still afford to look after my unemployed parents.
It's also pretty silly to argue that JPM, BAC and WFC can survive long term by lending to people with 0K in cash, 500 credit scores and no verified income.
-----------------------------------------
Thanks Byrk, but I didn't make that argument. You simply took the converse of my argument and attributed it to me.
k1
Also, sorry to hear about your boyfriend's job loss.
Didn't know the housemate was actually a boyfriend.
Peter writes: "Didn't know the housemate was actually a boyfriend."
That's like saying "didn't know that Morrissey was actually gay".
What interests me far, far more than Megan's romantic availability is why she is not at Davos while that self-promoting whore Julia Allison is...
The money is not there. There in the banks or in the money market funds. It's the illusion of money. In the age of economics everything is seen in relation to money.
Nature or God or both might be telling us we can no longer consume in the ways and at the rates we've grown accustomed to. Particularly on credit. Keynes' famous argument is obviously true but we cannot consume to infinity.
The paradox of thrift is not original to Keynes. It is found in Boswell, "Life of Johnson," 1791. Johnson opined that a man should spend all he had while living, because it was income for others.
Megan,
but the banks are not lending because they do not see a lot of investment opportunity as long as consumers are not spending. This is a more convoluted liquidity trap, but one nonetheless established by the fact that money is not moving around, and therefore, all who hold onto it (consumer/banks) are not spending it.
So the question is:
A) Do we try to fix this in the short-term through Keynesian style spending? -- or--
B) Take the approach that eventually, growth will come back. Problem with this is that eventually may not be until you are too old or dead to enjoy it. I mean, sure - give it enough time and we could be at the same poverty level as China and finally compete. But if you cannot see the problem with this, you either are wealthy already or Ayn Rand (and so stuck to theory that it serves you poor in times of crisis).
This sux. I ain't got no money before the collapse. I ain't got no money now.
Thanks Byrk, but I didn't make that argument. You simply took the converse of my argument and attributed it to me.
Then state your argument. Who are these qualified borrowers you speak of? What underwriting standards should the banks use for home loans? The only way we're going to radically increase lending for homes, is to go back to the no-doc, no down payment days of lending. Considering that standard has brought the world economy too its knees, I say no thanks.
Please read what ern1972 wrote and do listen to the econtalk podcast, it absolutely drove me crazy listening to Arnold not getting the paradox of thrift after having it explained about 9 times. You decide to save, thus creating investment, but the restaurant must then reduce savings in the face of reduced income, so there is a net loss in income, but zero net savings in the economy.
oops, substitute Russ for Arnold... econ podcast/blogosphere confusion!
thank you for opening eyes article on modern economy!
So, let's please not demonize the banks for "sitting on excess liquidity." - Mike
I don't think it's a matter of demonizing anyone. The question remains, if extending TARP funds to banks is not helping to stimulate the economy because the money is not being lent out (whether because banks are not eager to lend or because businesses are not eager to borrow), how important is it in fighting this recession? How much damage would really be done by letting a few banks go under, if they are not economically necessary, due to low demand for their capital?
If Mike is correct that there is simply a lack of qualified borrowers, then it is time for the government to act, not by increasing the supply of credit, but by creating demand. That means spending -- buying things, creating business. Businesses will start to borrow when their business plans start to look profitable because there is a good prospect of demand for their products. The government needs to create that demand, because consumers aren't. Good old Keynesian fiscal stimulus. This is not a particularly interesting thing to say, but for some reason a lot of people are trying to pretend that they don't understand it.
Of course, this analogy only works if you need to take out a loan to buy a tuna sandwich, but hey, Keynesians always were a little slow.
Isn't everything you just described in the "cash-vs-bank savings" statement exactly whywe shouldn't be focusing on tax cuts and education spending and exactly why we should be depositing this money into the banking system?
Once again, Megan shows she has absolutely no understanding of the banking system. Really, Megan - I think you have a good case to sue the University of Chicago for educational malpractice.
To review: banks do not "lend out depositors' money". The causation goes the other way - loans create deposits. Banks are never constrained in their lending by cash on hand, except in the case of regulatory capital requirements. They can expand both sides of their balance sheets at will, and the loans they create become deposits in the banking system.
This is not economic theory; this is simply the way it works. The purpose of banks is to convert long-term, illiquid IOUs into generally acceptable, liquid financial assets by acting as an intermediary, in combination with the Fed.
All of this sturm und drang about TARPs, nationalizations, "bad banks" and the like are rather spectacularly beside the point. Banks can always, from a practical perspective, lend to any creditworthy borrower (and even not-so-creditworthy, as we saw in the last few years...) They make the loan first and then obtain the reserves to fund it, either on the FF market or directly from the Fed via the discount window. The only reason it needs capital is to place private shareholders in the position of "first loss" with respect to the Fed and FDIC. There is no other practical reason for them - a bank is only "insolvent" if the bank regulators say it is.
The Federal government putting capital into a bank, under whatever guise, is merely this: one federal agency (the treasury) changing some numbers in a spreadsheet at a quasi-federal agency (the bank) so that yet another Federal agency (the FDIC) allows them to keep operating. You could just shhut down the bank and distribute its assets to another, or if you felt that was too disruptive you could simply let it go on for the time being.
All of that, however, has nothing to do with the real problem, which is that the savings desires of the private sector have increased enormously. And since all of those deposits need to come from loans, there simply aren't enough of them to go around. Since the "horizontal" channel of money creation - private banking - has failed, the only alternative is the vertical - federal - channel. The Federal deficit (which is, by accounting identity, exactly the same as net private savings) need to increase until savings desires are met.
And that is what the stimulus is about - it's not about "multipliers", or "putting people to work" (although it will), it's about increasing the deficit quickly enough to satisfy the private sector's savings desires before real damage to the real (non-financial) economy occurs. Which is why the best bet right now would be a payroll tax holiday until further notice, followed by $300B in no-strings grants to the states. If we don't the deficit will eventually get where it needs to be - but it will be a long, slow process while as tax receipts fall and transfer payments rise. It's much better to do it proactively.
Jimbo--are you the fellow who wrote the book proving that The Iliad wasn't written by Homer, but by another poet of the same name?
Megan, please put that teapot back in its proper orbit. Somewhere between Mars and Jupiter… Thank you
ps Keep the cash
The question then becomes why aren't banks lending, to which I see several possible and not necessarily mutually exclusive reasons.
1. They lack willing borrowers - This fits with the excessive savings Keynesian explaination and AD stimulus makes sense.
2. They need steady up their own balance sheets by adding liquid assets or paying down debts - In this scenario the problem is insufficient savings and AD stimulus would compound it.
3. Confidence in their own ability to assess creditworthiness is low - In this scenario, the savings rate doesn't make much of a direct difference one way or the other since both the supply and demand may exist, but the banks don't have the info to match them. This lack of confidence may be fundamentally justified too - if recent events haven't proved that the models being used were deficient, then I don't know what would.
If it's just 1 or 2, as long as you know which one it is, it isn't hard to address. There really isn't anything that can be done in the short run about 3. If it's 1 and 2 at the same time, we're boned.
Megan, i thought you were loaded. What do you need a housemate for?
And when you say "layoffs have come to the McArdle household," I thought you meant a parent or sibling. (Heavens, not you). But alas, layoffs have not yet come to your family.
Long story short. I worked at the House of Lehman for 10 years. I was laid-off in march 08. I spent 10 months looking for work. And now I sell rocks on eBay. Rocks. Expensive rocks. But rocks.
I'm amazed that your fangirls and fanboys don't call you out for declaring this a 'depression' only when your housemate loses her job. Do they love you that much that an asinine comment like that goes unanswered?
Wow.
Jimbo's insults were ... insulting, but more revealing of the writer's character than of Megan's.
Still, his conclusion seems most correct policy, a payroll tax holiday until the crisis is over.
The reduced taxes not spent would be saved -- and thus go into the banking system as the TARP bailout does, but with a reduced household debt, which is far better for the long term.
The economic recovery packages proposed by both parties reminds me of the adage, to keep doing the same thing and expecting a different result is insanity.
Why do we still expect trickle down to work? Giving the banks billions in bailout money then hoping they'll lend it to consumers who will then stimulate the economy through spending is still trickle down. Why not give the money or large portions of it directly to taxpayers, whose money it is then let them use it directly to purchase cars, homes, consumer goods or to pay off debt to the banks.
But I guess wall street won't get it's billions in bonuses if we go that route.
Megan, I really hope you are reading these comments. Your argument would be true if your premise were true. Your premise, however, is false. The amount that, say, a family might save would increase the flow into the banking system on one end. That money, however, would be directly offset by the amount the business, i.e., the restaurant, has lost and, now, cannot save. That money does not raise the overall pool of savings in the economy as a whole.
Your thinking isn't bad, you just haven't accounted for all of the logically concluding results.
Megan, you are even more right than you know
Banks are not literally sitting on cash.
When they don't lend money, they do the what they consider the safe thing - they put it in treasury bonds. They lend it to Washington to spend.
So even the bank savings are circulated through the economy too.
Good work exposing the keynesian myth.
"There's a problem with this crude, version, of course: it's only true if we hoard the money in the form of cash. "
The liquidity trap a.k.a. paradox of thrift is stupid regardless. To believe even this much requires a complete misunderstanding of economics.
Agrarian economies are all about hoarding. In order to save up for the winter people need to "hoard". There are two ways to do this.
1) Every person buys all the goods they need to get them through the winter during fall harvest. In which case each person needs their own storage equipment for every different kind of good. They need to store fuel, food, clothing, etc. Which means they cannot specialize. Hows a baker suppose to bake bread when wheat is distributed evenly to the entire population.
2) They can hoard cash and let the producers of these goods hoard their products. Then the producers can specialize in storage. Over the winter the people deplete their stores of cash while the producers their stores of goods. By spring the producers have the cash to employ people in planting.
The second option is far more efficient than the first because everyone specializes. In fact "hoarding" money is all about keeping the wheels of the economy rolling.
What we are experiencing now is not due to hoarding cash. It's due to fractional reserve banking. A pyramid scheme of grand proportions is unwinding.
In fact, the solution to the problem at this point is precisely "hoarding" or as it is otherwise non-disparagingly known as, saving.
The other antidote to the problem is price deflation. Another thing the economically ignorant fear will harm the economy.
I could write an entire book on all the economic fallacies that play into this idea that hoarding is bad for the economy.
You know that scene in Planet of the Apes where the astronaut realizes that none of the humans can speak. It dawns on him that he might as well be living with a bunch of monkeys. Well that's how I feel about the competence of 99% of people when it comes to economics.
Frankly, I don't know how anyone can be so stupid as to believe that saving money in the form of cash is a bad thing. They call it the "paradox" of thrift precisely because any idiot should be smart enough to see it isn't. Exactly in the sense of Zeno's paradox.
As everyone knows we can move about freely despite Zeno's "proving" it's impossible. What's more likely, that he made a mistake or that there is a paradox?
Keynes was like Zeno, a smart guy who was prone to logical errors. Someone who argued for the most ridiculous ideas. The guy who believed that counterfeiting money and throwing it out of helicopters was good for the economy.
BTW, Banks have not "stopped" lending. Lending rate merely leveled off, and never dropped. My son just took out a loan and I'm about to for a car. No problem.
What's happening is a bunch of rich fat cats are currently trying and succeeding in unloading their bad "investments" on the taxpayer. That and a bunch of pork barrel spending.
This is how a bank run looks with a central bank, fiat currency, FDIC insurance, and a bunch of crooks running the country.
Wait till that Ponzi scheme called Social Security blows up in our faces.