Want to know why the credit crunch is going on? Watch this highly enlightening video (broken down into 5 individual movies to fit YouTube limits). The video clearly explains why a “run on the bank” is deadly to an individual bank, and why there would be a “credit crunch” when there’s a run on all the banks.

And that’s what’s going on today. We’ve got a run on all the banks. Money created as debt is only good when the debts are repaid (which isn’t happening with rising foreclosure rates), so the entire highly leveraged system is crashing down. And that’s why we need a $1 trillion bailout of the financial system.

The fractional reserve system (as practiced by all banks today in the world) is awesome, scary, brilliant, and fragile. Money created as debt is fascinating and frightening. No debt == no money. That’s what happened during the Depression. Banks stopped or couldn’t lend

“That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” ~ Marriner Eccles, Chairman and Governor of the Federal Reserve Board

Enjoy or shudder!