I don’t think any money should be guaranteed. If you put your money in a bank like the stock market and you lose it, that’s the risk you take. Sorry but it’s ridiculous for the federal government be involved in banking at all.
Actually, there have been several historic American panics. There were runs on many banks that were very harmful to ordinary people. As you suggest, they lost their deposits.
To reduce and even eliminate that possibility, the Deposit Insurance concept was created. For ordinary depositors the risk is reduced and even eliminated. The result is a stable banking industry.
One result was the death of Wachovia and it’s absorption by Wells Fargo. Depositors came out ok, but Wachovia stockholders lost their investment
If you like your bank run, you can have your bank run.
FDIC insurance started in 1934 as a way of reducing bank runs as occurred in the recent Great Depression.
“I don’t think any money should be guaranteed.”
In theory I agree with you.
However in practice it will not work with the Homo Sapiens species.
The banking system will collapse immediately—since the modern economy depends on trust—and we know lots of folks cannot be trusted.