Tom Bilyeu

it seems to be a necessary result of fractional reserve banking, meaning that if you deposit $10 to me, I only need to keep, and I think this is actually accurate, I only need to keep a dollar.

And so the other $9 I can actually put to work in terms of loans to other people or investments.

And that...

puts us in a position where, okay, you gave, technically you're giving the bank a loan.

A deposit isn't just, oh, my money is in a vault somewhere.

I've given the bank a loan.

The bank is gonna go do things with that of varying degrees of risk.

In the case of SVB, they thought I'm doing the least risky thing, which is I'm buying government debt.

The government is gonna back it.

The government, especially the US government, can actually print money if they had to, to cover that, which they did in this case.

But if a lot of people go to the bank at the same time, known as a bank run, and say, I want all of my money, the bank goes, whoa, whoa, whoa, I don't have that money.

And so I have all these assets.

And as long as those assets remain liquid and I can liquidate them in a timely fashion, then sure, as long as the requests for people's deposits back are coming at a reasonable rate.

All is well.

But when you get a lot of people coming at once and you have the investments that they've made have gone down in value, now you get a perfect storm.

Hold tight.

We're going to take a quick break.

And we're back.

How nightmarish does that scenario become?

So you've got your money locked up in something for a long time, but it's declining in value.