> floods can't decide to happen when they notice that you're vulnerable to a flood

But places more vulnerable to flood have historically have had more flood damage! Clearly the floods are strategic about how they come about. 

One of the differences, though, is that floods can't decide to happen when they notice that you're vulnerable to a flood: i.e. bankruns aren't exogenous events.

Undisciplined

Feature of the fiat world // he never studied banking history past the 20th C...?

So then where did the idea that banks have particularly risky funding come from that Levine can make such a statement in his very-popular newsletter as if it is a well-known fact?

Scoresby

why is it that banks couldn't do the same?

they can, and they could. History -- by which I basically mean pre-regulation banking in the 18th and 19th century -- have plenty of banks figuring out the right level. (Scotland being the go-to example for all manner of innovative banking practices, including reserve management).

econ

Banks and Strategy... Because That's What Strategy Is (Bloomberg, Matt Levine)

denlillaapan

> why is it that banks couldn't do the same?

they can, and they could. History -- by which I basically mean pre-regulation banking in the 18th and 19th century -- have plenty of banks figuring out the right level. (Scotland being the go-to example for all manner of innovative banking practices, including reserve management). 