> The problem has to do with a run on the bank.That's not what you're describing:
> All banks are currently reporting negative earnings. Most banks rely on credit, and revenue from said credit. If that breaks down (because people can’t pay). They collapse.
That isn't a bank run; it's not having a hedge against credit default risk.
A bank run would be all of the depositors trying to withdraw cash at the same time. But there's no reason for them to do that because their deposits are insured; even if the bank fails, their money won't go away.
> I think the fed can bail them out. I also think that requires printing money so inflation will be high.
The Fed is already printing money; they restarted quantitative easing along with the latest rate cut. I agree that this will cause inflation--in fact, if the printed money ends up, in effect, guaranteeing people's insured deposits, it will most likely cause more inflation than the previous rounds of QE did, since that money will likely be spent (whereas in those previous rounds of QE most of the printed money just sat in the banks' accounts at the Fed, since the banks were unwilling to lend it out).
