Run on Banks

If there was a run on banks today, would it matter?  Since most* bank accounts are FDIC insured (*FDIC is another topic), wouldn't that mean you would still be able to get your money if a bank crashed/closed?  

It would only matter if it was widespread enough to constitute a run on the Federal Reserve itself.  In which case the game is up, either the economy collapses or the dollar collapses, six of one....

Short of that, there would be somewhat localized effects the same as if any other industry suffered a significant rate of business failures, and perhaps damage to the core "private" financial infrastructure (stock markets, investment banking, etc.), but not a "run on the bank" kind of crisis.  More likely the real damage would have come from whatever caused it in the first place.

If there is a run, it won't be for cash.  It will be to another currency or a black market.  In a system under duress, fiat currency is worthless.  People will convert it to commodities or another currency as quickly as possible.  Bank runs in the past were runs to convert fiat to gold.

The FDIC is a joke.  If it gets that bad, the presses will bury the value of the dollar Weimar style.

liberty student:

If it gets that bad, the presses will bury the value of the dollar Weimar style.

I was reading somewhere (here maybe) that what is likely to happen is that people would demand their money in paper and then when they realized that the Fed (or Treasury) will have no problem printing up all the demanded cash would turn around and deposit it back into banks and cause a hyper-inflationary drive the like of which has never been seen before.

Most of the money today is just bits in a database somewhere and if it were ever to become 'real' that's the end of the current system as we know it.

Now that I think about it there are flaws in this argument so YMMV.

Yes, what Liberty Student said.  The Treasury department and Federal Reserve will always be able to print enough Federal Reserve Notes to redeem all deposits.

You'll be able to get your pieces of paper out of the bank.  There won't be any guarantee that they'll actually be able to buy anything.

The final run on the dollar will occur when people rush to convert their unbacked paper to silver or gold or other tangible goods.  The price of gold will go to infinity, as people holding gold will be unwilling to trade it for paper at any price.

During hyperinflation, the quantity of money doesn't just increase.  The velocity of money also increases.  People with rapidly inflating paper rush to spend it as soon as possible.