Jim wrote: > I guess it depends on your perspective. The transactions cost is low > if you're rich.
It's is a macro fact. Take the transaction costs of withdrawing money from the average deposit in the U.S. -- in opportunity cost terms, including time spent in a line, etc. Divide this average transaction cost by the size of such average deposit. It's negligible. The transaction costs are an insignificant hurdle in the way of people intent in withdrawing their deposits when they've lost faith in a bank. The real constraint is not the little loss of value or the little inconvenience involved in withdrawing a deposit. The real constraint is the banks' solvency, which can be hit in no time if people are in panic mode. And that's what I was trying to communicate to Marv. All I'm trying to tell Marv is that modern banking is an extremely fragile institution. Those balance sheets may look solid one day and like sheer air the next. In a sense, their solidity depends on the robustness of our political and social institutions. Social structures have that quality. That's what moved Marx to write that, once one grasps the "inner connection" of things, the theoretical belief in the constancy and eternal necessity of our social institutions vanishes even before the social institutions themselves disappear in practice. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
