Yes. But this panic is not rational.
Discussion
It is if the people want their money.
It's the collective panic that's going to cause them all to lose their money. FRB isn't a badly capitalized bank. In fact, it's better capitalized than most.
Then why is it collapsing on Monday? The whole banking system is fucked is. Better yet: the whole economic system is fucked up.
Debt, debt and more debt. It’s a mess
Because once it starts, it becomes a race for everyone to get their money out at the same time. In reality, there is no objective reason to panic other than the fact everyone else is panicking. That's the point. Arguments about the merits of fractional reserve banking are kind of besides the point right now. That's academic right now. This is people's lives and livelihood in the here and now.
I understand this. But it’s the banks themselves who made a mess of this. The panic makes the mess bigger, but at least it exposes how big the mess is.
Yes it’s sad for everyone. But I was already sad. Should we just ignore the issue then, and play good weather?
It’s quite rational to withdraw all your money if there is any risk whatsoever of a bank run precipitating.
Which is why when a bank run starts, it never stops. It becomes purely about psychology.
Same as everyone trying to get out of a soccer stadium at once and getting trampled.
But it's natural to want to secure your wealth when it's possible that leaving it in the hands of others could cause you to lose it. If that was your money, would you just leave it and hope that the panic doesn't occur or do you try to front run the panic? This is the entire problem with fractional reserve banking.
When are humans rational? Remember the idiots loading up on toilet paper in 2020? Most normies are complete idiots.
People are subconsciously mimetic in their response, just following their neighbor.
Panic is always irrational as it comes from chaos.