I know the non-financial savy are saying, “say what”? Let me explain. The not so Federal Reserve bank has removed the reserve requirements for banks and other lenders to forgo having to set aside money with the Federal Reserve. This requirement was initially put in place to ensure banks had the cash to cover their loans.
I will break down the news in a moment. First, I will provide an example so everyone knows what this means.
A Banking Example
Let’s say you are a bank, and your name is Joe.
Bank of Joe alright. Four depositors come through your door, and each put $25 bucks into their brand spankin’ new accounts. So you, Bank of Joe, now have $100 bucks in the vault!
Well, ol Billy Bob walks into your bank and asks for a loan for $50 bucks. So you loan him the money. You win. You will make more money from Billy Bob in the form of interest from the $50 dollars that you loaned him, (that was not yours to begin with). That leaves your bank with $50 bucks in the vault.
You just magically created money through debt!
On paper, there is now $150 bucks in circulation.
Remember those four depositors?
What happens if they all come knocking on your door at the same time and wanted their $25 bucks back?
You wouldn’t have the dough!
Welcome to the fractional reserve banking system.
Federal Reserve Removes Reserve Requirements
Due to that, the Federal Reserve has had reserve requirements in place. Meaning, that ol Bank of Joe would have to have at least $50 bucks sitting in a not so Federal Reserve bank just in case, more customers than expected wanted to withdraw their funds. Your Bank of Joe is still pulling a fast one of those four depositors, but most likely, they will never know.
So who cares!
Essentially, the Federal Reserve’s reserve requirements were put in place to ensure lending does not get out of hand, and a bank goes bust. Well, on March 15th, 2020 that all changed. The not so Federal Reserve changed their (con) game, banks and lending institutions will no longer have to hold requirements with the not so Federal Reserve.
This means, the not so Federal Reserve has pulled out all the stops. Banks can now lend out all of the money in their vaults and loan every bit of it out as they see fit.
What does this mean for the depositors?
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Who cares, your making billions!
Why Did The Federal Reserve Remove The Requirement
Now I want to provide you with the statement right from the Federal Reserve. Here is a question found on their FAQ page.
Why did the Federal Reserve reduce reserve requirement ratios to zero percent?
For many years, reserve requirements played a central role in the implementation of monetary policy by creating a stable demand for reserves. In January 2019, the FOMC announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework.
They changed policy.
A policy that had put in place since the beginning of this corrupt institution. U.S. Congress has the authority to coin currency, we do not need the not so Federal Reserve to do it for us. They are the man in the middle who directs and determines all of our financial futures.
Tar and feathers anyone?
Their answer continues.
As announced (Off-site) on March 15, 2020, the Board reduced reserve requirement ratios to zero percent, effective March 26, 2020, in light of the shift to an ample reserves regime. This action eliminates the need for thousands of depository institutions to maintain balances in accounts at Reserve Banks to satisfy reserve requirements, thereby freeing up liquidity in the banking system to support lending to households and businesses.
There you have it folks, right from the horses mouth.
So it’s modern monetary policy for the United States and the world for that matter. Which means; spend, spend, spend, and then spend some more. Wait a minute, I heard that line somewhere before: IMF: “Please Spend. Spend As Much As You Can And Then Spend A Little Bit More”.
That’s right. Globalism. Globalization. The New World Order. It’s all coming together real nice. It will take time, much more time, but it’s coming together.
Federal Reserve Wins
When you combine this news with the not so Federal Reserve’s continued purchase of bonds and treasuries. We can quickly see economic discipline no longer exists. The not so Federal Reserve is purchasing bonds and other assets that no one else dares touch.
In the end, the not so Federal Reserve is using currency they fabricate out of thin air to purchase real hard assets. This is legalized theft from you and your family.
This will all further inflate the economy until, as usual…
It pops.