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income account. But a bank which is in good shape on its income account may nonetheless experience serious trouble if for any reason its depositors should lose confidence in it and suddenly demand their deposits en masse. Many a sound bank was forced to close its doors because of such a run on it during the liquidity crises described in the preceding chapter.
These two problems are not of course unrelated. One important reason why a bank's depositors may lose confidence in it is because the bank is experiencing losses on income account. Yet the two problems are also very different. For one thing, problems on income account are generally slow to arise and considerable time is available to solve them. They seldom come as sudden surprises. A run, on the other hand, may arise suddenly and unpredictably out of thin air.
The situation of the U.S. is precisely parallel. Residents of the United States and the U.S. government itself are seeking to buy foreign currencies with dollars in order to purchase goods and services in other countries, to invest in foreign enterprises, to pay interest on debts, to repay loans, or to give gifts to others, whether private or public. At the same time, foreigners are seeking to acquire dollars with foreign currencies for corresponding purposes. After the event, the number of dollars spent for foreign currency will precisely equal the number of dollars purchased with foreign currencyjust as the number of pairs of shoes sold is precisely equal to the number bought. Arithmetic is arithmetic and one man's purchase is another man's sale. But there is nothing to assure that, at any given price of foreign currency in terms of dollars, the number of dollars that some want to spend will equal the number others want to buyjust as there is nothing to assure that at any given price of shoes the number of pairs of shoes people want to buy is exactly equal to the number of pairs other people want to sell. The ex post equality reflects some mechanism that eliminates any ex ante discrepancy. The problem of achieving an appropriate mechanism for this purpose is the counterpart of the bank's problem on income account.
In addition, the United States has a problem like the bank's of avoiding a run. The U.S. is committed to sell gold to foreign central banks and governments at $ 35 an ounce. Foreign cen-

 
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