It’s that time of year when you’ll see It’s a Wonderful Life playing here and there on television or cable or perhaps you’ll have it delivered for your holiday gathering via the internet. No matter how you get it, please watch the movie. It’s a story about what really matters in life and how to gain some perspective on things both personal and professional. It also has one of the finest tutorials on economics in the history of film, the bank run scene which I’ve featured above. Here’s the text of the key speech, delivered by George Bailey played by the legendary Jimmy Stewart:

No, but you… you… you’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house… (to one of the men) …right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?

Why is this so important to what I you do everyday? Well, one thing people (like the people in the scene) forget is that even though banks might seem like impersonal, faceless corporations they actually allow real people to collaborate with each other to create a better life. Builders and developers are dependent on banks to build housing. Buyers are dependent on banks to help make the loans for buying housing. We’re all connected, whether the bank is a small local one like the Building and Loan or a huge one like Bank of America.

Here’s one of the finest videos on the subject of the mechanics of what George describes in the film, fractional reserve lending, done by Sal Kahn of the Kahn Academy.

As I have mentioned over and over again, development is a risky business and financial institutions make it possible for people to borrow the money to build the future. The added value created pays back the investor. All of this feeds the economy. It’s a very intuitive system built on trust not profit and one that creates our housing and office space in Seattle.

It’s hard to feel warm and fuzzy about banks and developers, but watching these videos might throw another log on your fire. In order to create affordable housing we need lenders, builders, and people who are willing to take the risks and work together to create housing options and choices for people of all walks of life in our growing city. .

Merry Christmas and Happy Holidays!