The Ethics of contributing to a Run on the Banks

[Neto]

You planning to buy a house for cash?

Living within one's means is a good thing. More people should try it.

And, what are the options if you DON'T use cash? A loan? Good luck with that if you are "in the same boat" as we are. I have never had a credit card associated with my SS #, so if I apply for one, I am refused (I have done that). If I check my credit score on one of those websites that do that, I do not exist. We bought our house for cash, and do the same with cars. Because of advancing age we are saving up to purchase a single level house (one that is needing lots of work, so it's not a simple transfer of sell one house, buy another) because this house is a split-level, and there are no bathroom facilities on the main floor. (I also want to be able to build a small shop, so saving for that as well.)

As to the question in this thread - I don't see any problem with a Christian attempting to get their own funds back from a bank. It was not the depositors who caused the failure, and the ones who were insiders at the bank (and probably bear some of the responsibility for the bank's failure) already took theirs out several weeks ago.

[Josh]

Blaming depositors for a bank run is like blaming a battered wife for burning supper and making her husband angry.

The bank’s job is to manage its reserves and cooperate with the FDIC, the OCC, the Fed, and the state banking regulator in order to minimise the chance of a bank run. If one does happen, then it happens. The bank ceases to exist and the government works the rest out.

There is nothing remotely noble about leaving money in an insolvent bank.

[RZehr]

What if you were in a country where there was just enough food but no extra. Suddenly people start making a run on the grocery stores. Would you participate?

What if you were in a country where there was not enough food. People are standing in line to get food. Would you buy as much as possible knowing that some people at the end of the line might not get any?

As I live today, with a full pantry, and no real concern that a grocery shortage would equate to my family starving, I really wouldn’t be too concerned. But if I lived in, say, the Soviet Union, and I either had to stand in line early, or go without, you can bet I would have no ethical qualms about standing in a bread line.
Would I buy as much as I can get? Probably, given that I think that there would be a reasonable limit that would dictate how much I could get.

Are these senarios different because you do not already own the food? You say you could share the money with others if the bank is going to fail and that seems logical. But it was the run on the bank that caused the bank to fail in the first place. I guess that is the issue I am pondering...

Food is a really critical and immediate need. So that’s one difference. Compared to say, toilet paper.
Since we already give money away to help people, this isn’t really just a theoretical, or convenient excuse.

And as pointed out, bank runs, aren’t triggered by bank runs. Something else unfortunate has already happened, which in turn causes a bank run.

Josh believes the church should have all things in common.

Is there such a thing as a community having all things in common, both believers and non believers? Do we have community responsibility apart from church brotherhood responsibility?

I think we do. This is why Christians run soup kitchens. Also, see below.

During Covid, we went for toilet paper when there was a run on toilet paper. We generally stock more than we need for one week anyhow, so I would be glad to share with my neighbor if he had need. I just didn't want to be without any, for obvious reasons.
However, I have questioned whether I should have stocked more than usual, knowing that some would likely go without. If it happened again, I would likely order the large commercial rolls online or at a local business, rather than contribute to the run on regular toilet paper. Something about the "I got here first so I get what I want," doesn't seem to sit well with me.

I tried to buy extra toilet paper. Was fairly unsuccessful. But because we are (I suppose) like the typical large Mennonite family, we happened to have a decent supply on hand, which we did share with our non-Christian neighbor who said she was really low, and not able to find any.

I think this is key. Go ahead and stock up. Go ahead and pull your money out of the bank. The problem is hoarding. Prudence isn’t unethical. Going broke by refusing to get your money out of a bank isn’t helping anyone.
I’m reasonably well acquainted with the prepper mindset. I don’t find it good, because at its core is the selfishness and hoarding. Guns. Shoot the city folks. It’s ridiculous.
What I’ve always said to these guys, is that I have to share what I have. We would never have pallets of freeze dried foods, and defend it from our neighbors with guns, shooting people. That is patently a ridiculous idea. Even without ethics, I think people would have a much better chance of surviving what ever they think is coming, by making friends and allies of one’s neighbors, which need a to be done before the day of trouble, a la the unfaithful steward. Banding together has historically been the more successful strategy.

As far as we know Jesus did not have any money in savings, which is why he instructed Peter to get money from a fish.

But Jesus did benefit from those who did keep money in savings. And Judas did carry a bag. Did Jesus want him to carry a bag, or should the money have been given away immediately?

Would Jesus urged his disciples to help make a run on a bank? Would he have done so himself if he had money in a bank?

Sounds like they didn’t trust banks at all - unless they already did a bank run, and got their money out.

Jesus probably knew he was going to have a short life. He probably made choices in light of that, such as not having children, and having no place to lay his head. If not, he for sure knew that his needs were going to be met. When he needed tax money, fishing was the answer. Nowadays, fishing costs money.

As I said initially yesterday, If I feared total loss and thought I could get my money out. Truth is, I don’t generally fear that. I was just saying that it would not be ethical factors that would stop me - it would be other things, probably.
And I doubt that by the time I learned about it, I would be one of the forlorn ones standing outside the locked bank doors, hat in hand. But what I wouldn’t be, is upset with the fortunate people who got their money out. I’d be upset at the situation, and with the bank.

Bottom line? If it’s okay in the first place to have, save, accumulate, money in a bank, then it is okay to pull it out at the risk of loss.

[barnhart]

If it’s okay in the first place to have, save, accumulate, money in a bank, then it is okay to pull it out at the risk of loss.

I see some clarity here. There is an element of struggle and domination built in to banking and monetary policy, each group determined to get out more for themselves by influencing or manipulating others. Money doesn't "work" for you, nor does it produce profit, people do those things and money is the token used to officiate who is best at the system. If you dig deep enough you might find someone who made money off the collapse.

[RZehr]

Oops. I made a typo on my previous post that said the opposite of what I intended to say.
Should have wrote:

And no doubt that by the time I learned about it, I would be one of the forlorn ones standing outside the locked bank doors, hat in hand.

[ken_sylvania]

Oops. I made a typo on my previous post that said the opposite of what I intended to say.
Should have wrote:

And no doubt that by the time I learned about it, I would be one of the forlorn ones standing outside the locked bank doors, hat in hand.

I just figured you cared so little about your money that you wouldn't even bother standing in line to wait.

[Valerie]

You planning to buy a house for cash?

Living within one's means is a good thing. More people should try it.

25% of houses sold are sold for cash. Of course, this includes loans from "Uncle Joe" as well as well-heeled investors.

That was not the case the 17+ years i was in real estate, is this new?

[Josh]

Living within one's means is a good thing. More people should try it.

25% of houses sold are sold for cash. Of course, this includes loans from "Uncle Joe" as well as well-heeled investors.

That was not the case the 17+ years i was in real estate, is this new?

Yes, it’s new. There are special financial instruments rich people access that give them a “line of credit” where they can borrow against their money their houses and their business and make cash offers on houses, instead of having an offer contingent on a mortgage.

Once they buy the house “cash” (with that line of credit) they immediately refinance the house into a mortgage, or else use that house to get another line of credit, and then can repeat and buy a 2nd house. And a 3rd, and so on.

[JohnHurt]

You planning to buy a house for cash?

Living within one's means is a good thing. More people should try it.

And, what are the options if you DON'T use cash? A loan? Good luck with that if you are "in the same boat" as we are. I have never had a credit card associated with my SS #, so if I apply for one, I am refused (I have done that). If I check my credit score on one of those websites that do that, I do not exist. We bought our house for cash, and do the same with cars. Because of advancing age we are saving up to purchase a single level house (one that is needing lots of work, so it's not a simple transfer of sell one house, buy another) because this house is a split-level, and there are no bathroom facilities on the main floor. (I also want to be able to build a small shop, so saving for that as well.)

As to the question in this thread - I don't see any problem with a Christian attempting to get their own funds back from a bank. It was not the depositors who caused the failure, and the ones who were insiders at the bank (and probably bear some of the responsibility for the bank's failure) already took theirs out several weeks ago.

Neto,

You made several good points, the lack of credit, and why you should take your money out of the banks, as the failure of the banks is their fault.

We paid off our house in 1999, and have been mostly debt free. When I applied for a car loan, I found that being debt free had destroyed my credit rating. I have avoided banks ever since.

A bank will loan out more money than it has deposits, and maintains only a "reserve requirement" to back up all of their outstanding loans. This is called "Fractional Reserve Banking". A Credit Union can only loan out the funds they have on deposit, which makes a Credit Union a bad place to get a loan, but a very good place to keep your short term funds.

I would strongly suggest that everyone pull their money out of the banks and put their money into a credit union. The banking system is unsound due to fractional reserve banking, and it will fall, just like Babylon in Revelation.

Usury is the charging of interest on a loan. Usury is not exorbitant interest, but any interest on a loan. Usury is prohibited in the Bible (Leviticus 25:36-37) David in Psalms 15:1,5 tells us that someone that charges usury will not live with God. Usury is listed as one of the sins that requires a death penalty (Ezekiel 18:13). Islam prohibits interest and has interest free (see "lariba") banks because of this same prohibition, as Islam holds to God's Law closer than we do. Christ also held to every bit of God's Law (Matt 5:17-20), which includes the prohibition against usury.

Christ said in the NT parable of the Talents, when the one talent man calls our Lord a thief that "reaps where he did not sow", the Lord tells him that if he was to be called a thief that steals or reaps what he did not sow, then the one talent man should have resorted to usury, as usury is the same as stealing. (Matt 25:24-27) A Christian should never be involved in usury, or stealing.

A friend of mine sold his debt free home for a lot of cash, and put the money into a checking account at the bank, and not a savings account, so that his deposit would be safe and would not draw ANY usury interest while he was looking for another home.

Putting money in a non interest bearing checking account keeps the bank from counting the funds as their reserve requirement for making loans.

On the other hand, selling your house for $250K and putting a $250,000 deposit in a savings account in a bank with a 10% reserve requirement will allow that bank to make 10 times that amount in loans - $2,500,000 in loans based on your deposit. Pulling your $250,000 deposit out of your saving account will mean that the bank will have to find funds to cover their reserve requirement, or else the bank will be forced to call in $2.5 million dollars in loans. This is the reason the banks are failing, and why you should never put your money in an interest bearing account. This is why even a "small" run on the bank collapses it, and one day the entire system will come down.

If you have money in a bank, pull it out and put it in a non-interest bearing account in a credit union. Or buy something tangible, like a house, as the dollar will hyper inflate when it is no longer the world reserve currency, which could happen soon.

Another good thread would be: "What happens when BRICS replaces the dollar as the world reserve currency?" What happened to the UK after Bretton Woods? We live in interesting times.