Three words. Fractional. Reserve. Banking.
Paper, gold, rocks, whatever you might choose as money, will always be affected by the fraud that allows banks to lend out the money they promise to provide you upon demand.
A "bank run" is nothing more and nothing less than the fraud of fractional reserve banking being exposed. It is inevitable, as we are about to find out, not even the most powerful central bank in the world can hide the fraud forever.
With an honest banking system, bank runs cannot occur. Because the money you deposited is really there when you wish to access it. There would only be a panic in the event of fraud or other criminal activity.
I’m uber weak on the idea, but I am attracted to the notion of ‘free banking’. If you want to bank at a fractional reserve bank, go right ahead. Bank at a bank with one to ten, one to a hundred reserves.
Why is that a public problem?
Money is too important, too personal to be in government hands.
If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. Thomas Jefferson
It's true that if you eliminate banking, bank runs can not occur. But eliminating banking, will NOT stop economic recessions and depressions from occurring. Those have more to do with consumer psychology than banking.
And if you eliminate banking, economic growth and innovation will be significantly slowed as capital will not be effectively reinvested.
Can you provide any examples of countries that have prospered while eliminating banking?
You call banking "fraud", but almost everyone understands that when they deposit in a bank, the money gets lent out to others. So you would deny everyone the opportunity to collect interest, just to avoid the possibility of bank runs?
The protections on the banking industry that were put in place after the Great Depression have worked well to reduce bank runs. I believe it was a mistake to repeal Glass-Steagall and lower the bank reserve ratio to historic lows. I think these protections were removed to compete better globally, but we should have had a spine and required global competitors to come up to our standards if they wanted to compete in our market.