Douglas Diamond and Philip Dybvig (DD) recently received their nobel prize in economy, along with Ben Bernanke. This has to do with their influential paper "Bank Runs, Deposit Insurance, and Liquidity" (1983) in which they demonstrate that free banks are inherently subject to bank runs and panics that are, according to them, stochastic (i.e., random). The only remedy is for the government to provide tax-based deposit insurance.
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