That won't happen. If we default, currency devalues, and everything hyperinflates. Asset prices will hyperinflate as well. Banks will be buying up hard assets or switching currencies making loans more difficult too.
If we hit hyperinflation, you're going to see people revolt and protest. Occupy movement will be back. No one wants hyperinflation. That will also spell the end for the dollar, as the only way out of it is to move to a stable currency. The people who lose here are the ones who saved everything in cash. I hope things don't come to this, but it very well could.
Banks have been prepping for this scenario by buying up Bitcoin (I am not recommending you follow banks here, there are risks here too, and you'll need to make your own judgement). They have also been getting rid of their spare cash with reverse repro, swapping cash with securities. One thing I'm wondering about here -- if banks are swapping out cash with securities, aren't they exposing themselves to failure? They have been reducing their cash reserves and if people start withdrawing from banks in droves, that will force them to sell all their assets (including crypto). If they can't come up with enough cash, then they will fail.
For banks to fail, something needs to happen to trigger everyone to withdraw from their bank accounts. The bar gets lowered by eliminating bank reserve requirements and watching greedy banks dip into people's savings and swap holdings with riskier and less liquid assets.
Hyperinflation could trigger mass withdrawal as people will be spending their holdings as fast as they can (happened in Venezuela).
I'm still contemplating if it's possible to have bank's exposure in a risky asset fail (e.g. Bitcoin crash), but that would just make cash as a better alternative and banks ever more powerful.
So at the current moment, hyperinflation seems like the only viable way to eliminate banks.
Please crash so I can get a house for a normal price, but not so bad that people are starving and out on the streets. Too much to ask, I know lol
That won't happen. If we default, currency devalues, and everything hyperinflates. Asset prices will hyperinflate as well. Banks will be buying up hard assets or switching currencies making loans more difficult too.
If we hit hyperinflation, you're going to see people revolt and protest. Occupy movement will be back. No one wants hyperinflation. That will also spell the end for the dollar, as the only way out of it is to move to a stable currency. The people who lose here are the ones who saved everything in cash. I hope things don't come to this, but it very well could.
Banks have been prepping for this scenario by buying up Bitcoin (I am not recommending you follow banks here, there are risks here too, and you'll need to make your own judgement). They have also been getting rid of their spare cash with reverse repro, swapping cash with securities. One thing I'm wondering about here -- if banks are swapping out cash with securities, aren't they exposing themselves to failure? They have been reducing their cash reserves and if people start withdrawing from banks in droves, that will force them to sell all their assets (including crypto). If they can't come up with enough cash, then they will fail.
For banks to fail, something needs to happen to trigger everyone to withdraw from their bank accounts. The bar gets lowered by eliminating bank reserve requirements and watching greedy banks dip into people's savings and swap holdings with riskier and less liquid assets.
Hyperinflation could trigger mass withdrawal as people will be spending their holdings as fast as they can (happened in Venezuela).
I'm still contemplating if it's possible to have bank's exposure in a risky asset fail (e.g. Bitcoin crash), but that would just make cash as a better alternative and banks ever more powerful.
So at the current moment, hyperinflation seems like the only viable way to eliminate banks.