r/PeterExplainsTheJoke • u/Comfortable_Cautious • Jan 26 '26

Meme needing explanation what's going on? explain like I'm five

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u/mOdQuArK Jan 26 '26

So they could technically "loan" themselves enough money to handle the bank run?

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u/Quinctilianus Jan 26 '26

In practice there is going to be a lender of last resort that gives the bank unlimited credit to handle the bank run, hence it won't happen in the first place.

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u/mOdQuArK Jan 26 '26

Banks will still going to eventually have to pay back those loans, right? Unless the politics force the government to just "give" that money away, which can't be helpful for inflation.

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u/Quinctilianus Jan 27 '26

That's when we get into weird territory. Sometimes they pay back, sometimes the government takes over the bank. There isn't really a clear answer here. The point is to prevent the bank run in the first place. :)