We are taking your deposits and then pretending we have far more than that to lend, trade and invest with, knowing that if you all want the little bit of "real money" that you deposited, we can't even get you that. This is all legal of course, as we wouldn't dream of breaking legislations we have helped develop.

0%

During the pandemic of 2020, the Federal Reserve reduced the reserve requirements to 0%.

Nothing to see here.

Not any money anyway of our money, anyway.

Banks must hold reserves either as cash in their vaults or as deposits with a Federal Reserve Bank. On Oct. 1, 2008, the Federal Reserve began paying interest to banks on these reserves. This rate was referred to as the interest rate on required reserves (IORR). There was also an interest rate on excess reserves (IOER), which is paid on any funds a bank deposits with the Federal Reserve in excess of their reserve requirement. On July 19, 2021, the IORR and IOER were replaced with a new simplified measure, the interest on reserve balances (IORB). As of 2022, the IORB rate is 0.10%.

So, let me get this right (I could be very wrong). As of 2008, the Federal Reserve started paying interest on the money held in reserve, as an incentive to hold it. But, the rate of interest paid in 2022 was 0.1% and the reserve required by banks is zero??

So, they are saying that people should put their money in the bank (remember how much "savings" were accrued through the pandemic?), but not even a fraction of that (used to be 11%) need be secured? Instead, the entirety of deposits can be used to invest and loan out and the only incentive not to do so, is a small interest payment by the Fed, on money held in Master accounts at Fed banks?

What was driving the 2021 pumps in stocks?

There was talk last year of crypto exchanges being illiquid and unable to cover withdrawals, so how liquid is the banking system at the moment, if even a small portion of depositors chose to take their funds out?

Granted, the current interest rate payment on those accounts is:

However,

US Inflation Rate is at 6.41%, compared to 6.45% last month and 7.48% last year. This is higher than the long term average of 3.28%.

So, the money kept in those accounts is losing value being in there. However, with a 0% reserve, there is no reason to have it sitting there losing money, when instead, it can all be loaned out to earn interest instead. Sure, that means there are no reserves in case anyone wants their money, but that is a risk the banks are willing to take, as are the governments. Anything to keep the game ticking over and if it all collapses, don't worry -

Taxpayers will foot the bill, using their value from the future. Again.

I don't know....

The more I learn about the banking system and the way the economic mechanisms work, the more obvious it becomes that it really is a house of cards with a shiny, plastic façade, that is going to burn sooner or later. And at the rate it is being jigged, it feels like it is on its last legs and those with the means are squeezing as much blood from it as possible, before the next reset.

The company I work for has funds in Silicon Valley Bank that it uses for its US operations, and while it is only a portion of cash on hand, it causes some headaches. However, it will be protected, so it is safe, but in some respects, I think there shouldn't be bailouts again. Nothing changes unless there is immediate pain, but bailouts are protracted pain that will become increasingly painful into the future.

The system doesn't need a reset.

It needs to be scrapped.

There is no baby, just bathwater.

As I have mentioned many times before, the Covid pandemic was the fastest transfer of wealth from poor to rich the world has ever experienced. And, the greed didn't stop there, because the "system" then used the little wealth we left with it for safe keeping, to play the markets again and drive the values up, as if they would never come down again. And, they crashed, not because small investors lost faith, but because the large investors pulled their funds - made their run on the markets.

Is there a shift happening?

Too early to tell. But it is inevitable.

Isn't it?

Taraz
[ Gen1: Hive ]