Your Balance Is the Bank’s Debt - deposits, reserves and the run

The map of chapter 3: tanks joined by pipes under the street, with a meter at each end. This lesson opens the first tank on it, the bank, and shows that the water you think is yours is a promise the bank wrote you.

Before you start. One idea from Owning a Slice of the Ship - shares, bonds, and who gets paid first: there are two ways to put money into something. You can own a piece of it, or you can lend to it and be owed a fixed amount back. The Bank That Bought the Safest Thing - bond prices, yield and duration showed a bank failing while holding safe things, because its depositors left faster than it could sell. This lesson explains why depositors leaving can break any bank at all.