Because the bank loans nearly alla his money out.
They way you describe the system, 90% of his money isn't even in the vault, remember? It's loaned out.
If your system, 100% of his money is loaned out and 800% more. Which is more dangerous?
Oh, and that FDIC guarantee? Where does that money come from, hmmmm?
You're joking, right?
Nope. ALL of his cash is in my vault. I've loaned out 10X as much in checks and bookkeeping entries in my records.
When he comes for cash, I go to the vault, and give it to him. Then I scramble like hell to replace it to maintain my reserve requirements. I might even have to pay the Fed Funds rate to borrow enough until I can attract more deposits.
YOU on the other hand have a REAL PROBLEM.
In your bank, when he comes for his money, you only have 10¢ on every dollar he deposited in your vault. It takes him all of 20 minutes to tell everyone he knows that they'd better get down to the bank RIGHT NOW and get what little they can before it folds! They're outa money!!! I could only get a dime onna dollar!!!!
Panic is a terrible thing, It makes people say If, when they mean In, and 800% when they mean 900%, as in your post...
Nope. Some of it is from the insurance premiums the banks pay. Under normal circumstances that's plenty to cover the occasional folding of the Last National Bank of Podunk and its ilk.
In a major crash, guess what? The taxpayers are on the hook!