Finance & economics | Free exchange

America’s banks are missing hundreds of billions of dollars

How the Federal Reserve drained the financial system of deposits

It is easy to understand how money gets destroyed in a traditional bank run. Picture the men in top hats yelling at clerks in “Mary Poppins”. The crowds want their cash and bank tellers are trying to provide it. But when customers flee, staff cannot satisfy all comers before the institution topples. The remaining debts (which, for banks, include deposits) are wiped out.

This article appeared in the Finance & economics section of the print edition under the headline “The missing half-trillion”

From the March 25th 2023 edition

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