I understand why banks cannot pay people back in the moment, but wouldn’t they still owe their depositors their money when they eventually DO get the money back presumably once the recession is over?
This is all assuming the bank does not permanently go bankrupt of course. I understand that some banks may just never recover and close their doors for good.
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You are assuming that the money is actually there to give back.
Banks lend out and invest the money that you deposit with them. If they lend your money to some other guy and that guy goes bankrupt, they will not be able to give that money back.
Normally they put your money to use in so many different ways and have so many different depositors that a few bad investments don’t hurt as much. If enough of the economy suffers, things may be different though.
To avoid that sort of thing many countries have laws that restrict how much risk banks can take with your money and they also have rules that any deposits in banks up to a certain amount are insured or guaranteed by the government.
In the US the FDIC guarantees any deposit under $250,000. So normal people will not be affected even if the bank goes bankrupt. The US government will cover the losses though FDIC if necessary.
So unless you are both rich and have your complete lifesaving in a single account at a bank you will be fine unless the US government itself collapses.
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