What are you talking about old news, this is part of the news that tanked the US markets coming out of the weekend along with the sudden drop in rates and more QE in the long end of the debt markets. The Fed is no longer fighting to save equity markets its fighting to save itself and its broken banking system. Reserve ratios are the tenant of the banking system and without them depositors might as well just write the banks a cheque and walk away from their money, as it amounts to the same thing. Who would deposit money in a bank under such circumstances? Lending reserves just means increasing the risks to the system a 1000 times as most of the lent money that comes out of these banks ends up in the hands of gamblers or mal-investments, like the ones that have driven us to this point/the everything bubble/asset bubbles.
The sad thing is that the average person in the US wouldn't understand what this means, they still think banks are safe and their deposits are safe. Little do they know that now they are not, if even they ever were, as those phoney stress tests which previously determined the reserve ratios where just tailor made. Depositors in the US should now know that their deposits are only their money as long as the banks liabilities don't exceed their assets and they should be asking, if the banks were that strong in the US why has the Fed needed to put $800 billon of cheap loans into the overnight repo and 14 day markets since Sept last year. The explanation originally given by the Fed about corporate tax coverage is just a big fat lie. The banks have exposures somewhere in the system to undisclosed and massive liabilities. Otherwise the overnight rate wouldn't have spiked to 10% in September and needed to be managed by $800 billion of loans since then. Why is the bailout of this market still going? The system was failing before the virus hit and now the Fed and governments all around the world are using debt and now bank reserves in the US to bailout everything that fails. Just heard about the Australian airlines being bailout. The insolvencies and bailouts will start to look like a line of falling dominos soon. When will people realise that printed money is just a future claim on them, the taxpayer. Now the criminal bankers are dipping into people's bank deposits as well. Its always the average people who underwrite the bad decisions of these criminals. They should all be in jail not running this world.Esh
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