> Banks lend your deposits out. Banks do not play the market with your deposits. Anything close to that ended in 2008.
True that the Volcker rule of Dodd-Frank 2010 eliminated banks using deposits for prop trading as well as other gambling loopholes. That is, until it was weakened in 2019 by R Congress and Trump admin.
Fed doesn't print money, Treasury prints money. Money is created when banks lend. The FDIC DIF (deposit insurance fund) is $125B and funded entirely by private contributions from member banks. They have a $100B line of credit at Treasury if things go pear shaped but generally they have the authority to seize failing institutions and sell the accounts to other banks without touching the DIF let alone the backup line of credit. They did this in 2008, selling WaMu to JPMorgan.
I did not know how the FDIC was backed, thank you.
However, yes the treasury is an actual printing press, but the money supply is controlled by The Fed. They tell the treasury how much to print, they can provide unlimited liquidity to banks, and they are the largest backer of govt debt.
True that the Volcker rule of Dodd-Frank 2010 eliminated banks using deposits for prop trading as well as other gambling loopholes. That is, until it was weakened in 2019 by R Congress and Trump admin.
https://www.americanprogress.org/article/hollowing-volcker-r...
In any case, I would agree that the FDIC is the big difference, backed by the Fed printing press.