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<p>[QUOTE=&quot;Cloudsweeper99, post: 1454680, member: 3011&quot;]Well, if people take their money out of the banks, the FDIC won&#039;t owe them anything, so there is no money supply increase.</p><p><br /></p><p>I think you are correct that to the extent the FDIC merely uses cash on hand to pay depositors, the transaction would be moderately deflationary.&nbsp; I assume the FDIC keeps their funds invested in something [I didn&#039;t check] that would have to be sold to pay depositors and this would depress the price at least a tiny amount.&nbsp; If the FDIC uses &quot;money created out of thin air,&quot; then I don&#039;t think this would have an immediate impact on the money supply one way or the other.[/QUOTE]</p><p><br /></p>

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