What would happen if every bank closed down?

Question

What would happen if every bank closed down?

Answer 1

Haven't any of you heard of the FDIC (Federal Deposit Insurance Company)?  

If your bank goes under, you will not lose your money.  And every bank is not going to close down.

Edit:  Please understand, the Federal Government insures your bank deposits up to $100,000.  If you have more than that, just put it in different accounts at different banks.  And if you have more than that, you've got no money worries, anyway.  :-)

Answer 2

well banks are not simply used to store people's money so they can put it in a secure location to later take it out from.

banks have a very large role in our economy and work closely with the government. they help control inflation as well as unemployment. here's one way in which they work:

(pre-req: interest rates refers to the idea that if you borrow money from a bank, you will have to pay back that amount mulitplied by whatever interest rate the bank was charging, in the simpliest of terms)

let's say the government decides to put money into banks. in this case there is more money available, and banks will lower their interest rates in order to get more people to borrow money from them. in this situation, since interest rates are low, the amount of capital expenditures will increase (in other words, since interest rates are low companies will borrow money from banks to fund new projects, whether it be research, building expansions, or new programs). since capital expenditure has increaed, there is more work in the economy and more employment. however, more moeny in the economy also equals more inflation, which is hurtful to the economy.

now if the government takes money out of the system we see the reverse. banks raise interest rates in order to discourage people from taking the little money they have. therefore capital expenditures go down, employment goes down. however, since there is less money in the economy inflation goes down.

this is one of the issues the fed has faced in the past few months. they are deciding between inflation and unemployement. while inflation kills the economy, it prevents a recession.

if every bank closed down our economy would buckle. companies would be unable to fund new projects, there would be massive layoffs, and there would be chaos.

hope that helps.

Answer 3

I'd have to find another job.

Answer 4

people would have to keep their money under their beds

which would be party time for thieves

Answer 5

nothing serious, just people would put their money under the mattress. or in the refrigerator.

Answer 6

You mean just like Xmas Day?

.

Answer 7

rich people would become richer because they'll become private bankers and lend money to people with higher interest rates ,,,

Answer 8

This question is making me want to withdraw all my money now and keep it with me.

Answer 9

The only conditions under which this would happen are ones where you'd be more worried about staying alive than about things like mere money!

Global thermonuclear war anyone?

HH

Answer 10

we would start using gold  again, banks started by trusted people maybe one day this could happen?

Answer 11

Fairly unlikely scenario.  Lots of smaller, local banks are extremely strong.  Just ask for their balance sheets... it's once everyone starts to use the huge banks that the US will be in trouble.

Answer 12

probably be ok for wee short time.  Permanently itd be a nightmare.

Answer 13

Silly question.

Answer 14

The country would go bankrupt, and people would be hiding money in the dressers.

Answer 15

After a while we would probably use the old fashioned barter system where we would trade goods and labor instead of computerized "fiat" money or green paper.

Answer 16

We would have to keep our money under the mattress

Answer 17

We'd have loads more All Bar Ones