There's still a reserve requirement. That's the entire point of the overnight market. A quick google search says it's 10%. So if you put 100 dollars into your checking account, the bank has to match that to 10 dollars in their reserve account at the fed.
Quoting: okie1 In theory yes but in practice not just no but HELL NO.
What you’re describing is growth in the money supply. Central banks loan money at the Fed rate to banks. They in turn lend it to consumers and businesses, loaning out 10 dollars for every dollar in deposits, thus creating money out of thin air.
The problem though is that no one is borrowing money. Everyone’s credit is tapped out. They lowered and lowered interest rates, they inflated asset prices, but eventually, even af 0% interest, no one was borrowing. THAT is the end game, and that’s why the debt bubble is bursting.
Once that happens, central banks can start to buy treasuries, buy assets, but it becomes a game of diminishing returns. It’s game over. Once the monetary supply cannot expand anymore, it starts to contract. And if you thought inflation was bad, deflation is 100x more insidious.
You see, with inflation you just raise interest rates and suck money out of the system. Oh yeah it wreaks havoc on the economy? As Volker did in the 70s, but it eventually works. But deflation? That’s a much more difficult problem. In fact, it has no solution. Deflation is always the end game and, just like in the 30s, it results in war first then a complete reboot of the financial system thereafter.
With deflation, all asset classes drop in value. No one buys anything because they know it’ll be even cheaper tomorrow. Assets drop in value too so housing, crypto, stock market, everything.
That’s why you see the globalists attacking oil and food. Look up the Agricultural Adjustment Act of 1933. The way they fought deflation was to destroy food and supply chains in order to prop up prices.
From Wikipedia:
The juxtaposition of huge agricultural surpluses and the many deaths due to insufficient food shocked many, as well as some of the administrative decisions that happened under the Agricultural Adjustment Act.They literally destroyed food while people starved to try to keep prices for continuously falling. Sound familiar? Wondering why food factories are magically catching on fire and chickens culled due to “bird flu”?
The globalists have a plan and it’s the Great Reset, digital IDs and central bank cryptos. It’s not quite ready yet so they’re doing everything that they can to hold the existing system together. But she won’t hold together much longer, Kirk.
