People generally don't comprehend the nasty position that banks have got themselves into with fractional reserve banking it is not that different to that of UST and Luna, actually it may be worse. They are just lucky they have big friends back them up in the past.
Banks are taking deposit and loaning them out 20 times over. Giving loans to people without having funds to back it up this is like Defi based on UST (except with leverage and lower interest rates) and there is a lot of it, most people have loans for their houses, this is like shorting UST. This leverage banks against assets makes them very reliant on property and asset prices going up. If prices go up then the risk on their leverage is reduced and they get more money. If it goes down the trouble snowballs.
The traditional US dollar is what this old fashioned system works with. Like UST it needs to be held steady so that the loans and things on top of it don't get so volatile that people don't trust them. It is held up by the federal reserve which has T bills (like Luna) and also gold, let's say just in case (like USTs holdings of Bitcoin) and they can use this to defend the value of the dollar. The difference is one single person doesn't really have enough money to sell enough and short enough of these things to put the price into a death spiral.
The general public however are already short the dollar with their mortgages ( having a loan is effectively the same as beeing short). Banks are leverage long
the dollar. At the same time if loans default then banks have leveraged exposure to asset prices. So banks need asset prices to go up and the dollar to hold value, not so hot at the moment.
So the only remaining steps would be a unified public increasing mortgage debt and selling T bills and Gold. Might just happen by itself.
