>Please explain to me the difference between a bank and a Ponzi Scheme.

Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US).

Ponzi schemes ignore regulations and laws, and their customers' deposits are not insured or backed by any organization.

The laws that banks are forced to follow may be woefully insufficient, but the government is incentivized to prevent serious collapses because they would be on the hook for a lot of money. Retail customers are also less likely to start a run if they trust that someone will be there ready to hand over their cash when the dust settles.

> Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US).

Depositors also have first claim against assets in insolvency, so even uninsured accounts will be paid back before bondholders or equity owners. Even a well-intentioned crypto security has no such strict prioritization.

250k is per entity, per bank — perfectly legal to use multiple banks and banks publicly offer this as a service to businesses and high net worth individuals.

Example: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_banksw...

> Please explain to me the difference between a bank and a Ponzi Scheme.

The story of the 3 little pigs comes to mind. "The first pig made his house out of straw...".

> Banks are backed by the fed so runs don't happen. They did that after the great depression, along with a lot of those pesky regulations, when people were sick to hell of bank runs happening every few years.

Bank runs definitely still happen. Maybe not in the US, but in other countries they do. Latest example was in Russia when the announcement of the removal of Russian banks from SWIFT. Bank runs also happened in Greece, Canada, Bulgaria, Argentina and more, just in the 2000's.

I can't speak to the other countries, but I have no recollection of a bank run here in Canada in my lifetime. Do you have a link?

And the scope of my comment is clearly limited to the USA. We don't have a "fed".

> Starting on 19 April 2017, Home Capital Group in Canada started to suffer a bank-run on its deposits after an Ontario Securities Commission report was filed that had accused the subprime lender of deceiving its investors in 2015 with its lending practices

There is a list of bank runs on Wikipedia for more information: https://en.wikipedia.org/wiki/List_of_bank_runs

Comment threads frequently switching (without notice) between US-only topics and worldwide topics, so sometimes it's hard to know which is which. In this case, I thought the topic was international and didn't grasp your comment was talking US-only.

That list is extremely incomplete, and makes it seem like bank runs are happening more lately than ever before. In the 19th century and before they were frequent:

https://www.federalreservehistory.org/essays/banking-panics-...

And the creation of the federal reserve was in reaction to this.

Our contemporary love of deregulation is the most regressive and self-destructive push back into the bad old days I have ever witnessed. Texas, with their blackouts and water shutdowns, are showing America their future, and about half of the country seems to think that's a coming paradise.

I stopped trying to understand it years ago, for the most part. Other than through the facile P.T. Barnum framework, which I don't consider constructive or useful, as much as it seems to be true.

> That list is extremely incomplete, and makes it seem like bank runs are happening more lately than ever before. In the 19th century and before they were frequent:

Yeah, that might be. I'm not making any claim that bank runs are less frequent now than they used to be or vice versa. I'm just showing that the claim "runs don't happen" isn't true.