What it’s like when the banks collapse: Iceland 2008 firsthand

What it’s like when the banks collapse: Iceland 2008 firsthand

Many Bitcoiners look forward to the day in the future when the banking system collapses and hyper-Bitcoinization occurs.

But Jared Bibler — an American who experienced the most dramatic banking and share market collapse in living memory in Iceland in 2008 — says the reality is something no one would ever want to experience.

“It’s a deep nausea in the pit of your stomach that does not go away over many months, that feeling of ill-being persists,” he says. “Because it doesn’t happen all in one day. It happens slowly.”

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Like many in the crypto community today, in the lead up to the crash, Bibler felt as if he was the only one to notice the ever-widening cracks in the financial system. When it finally happened, he admits to a sense of misplaced pride.

“I was like, ‘Hey, guys, the crash is happening now! I was trying to warn you about this for a couple years’,” he recalls thinking. “So, I was feeling a bit arrogant or something. But I didn’t realize like, ‘Hey, in two days, pal, you’re going to be worrying if you can buy food.’”

3 October 2008 — a run on the banks

Prof. Gylfi Magnússon goes on national news at noon, says the banks are bankrupt, we don’t have enough foreign currency for everyday goods. Icelanders respond by withdrawing 5.5 billion ISK in cash, 27x the normal amount for a Friday.

— Jared Bibler (@jared_bibler) October 3, 2021

Bibler, who later joined the Fjarmalaeftirlitid (FME) investigation into the collapse, had quit his stressful Wall Street job in 2004 and moved to the tiny country after vacationing there. He ended up working at one of the largest banks, Landsbanki, and in a stroke of bizarre timing, quit his job just days before all three major banks collapsed in October 2008.

Each was the size of Enron, and the impact of the collapse on the 350,000 residents has been likened to 300 major banks collapsing in a country the size of the United States. The stock market plunged 97% from its 2007 high and the value of the national currency, the Krona, halved. People began to stockpile goods from supermarkets and many were forced to line up for food aid.

Jared Bibler amassed piles of evidence during the investigation. (Supplied)

“Imagine if the money that you have in your bank account now would suddenly buy you 1/10th of what it had? That happened in a week. How

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