Federal Reserve pushes for elimination of reserve funds requirement

Larry, perhaps this is the reason the Fed has changed the rules. The economy is contracting. The slowing down of the economy and the fact that they can't get anyone to buy the treasury bonds is dictating creative financing.

http://www.netcastdaily.com/broadcast/fs...

Don't worry Erik, I heard that Helicopter Ben has ordered small scale printing presses for each bank.  They are really fast machines.  Your wait should be short.

I am on board with the idea that this is the fed's manner of dealing with the essential insolvency of the banking system.  You take the addict and give him one big ole monster shot of speed to jolt him back to life.......     

Clearly this has to collapse,  but what they're doing is zapping more life into the shambling zombie that is our economy.  So how long will this little fraud keep the zombie walking??  How long before the body parts start falling off?

And is there any way for the average Joe to make any money off it before it crumbles??

I have a feeling this probably has to do with encouraging more banks to buy more treasury debt. Just a hunch - that's what the Fed needs now is more treasury buyers.

Is there a way that this change makes it possible to churn more and more money into treasury debt?

Erik

Erik,

You know it doesn't work that way. Banks don't make loans from deposits,  deposits are made from loans.

Mish's Global Economic Trend Analysis: Fictional Reserve Lending ...

This is a situation where the law is simply catching up to reality. 

"This is a situation where the law is simply catching up to reality."

 +1 ..

 Can't remember if it was Mish or Steve Keen that described the lend first, find reserves later idea..

 Along with mark to fantasy, ( don't ask, don't tell   ?) it's another qualitative nail in the woodworm-infested coffin of BAU..

 Reserves ? We don't need no steenkin reserves!!

 As Bill Hicks  (god bless) might say.. "Is this real ? Or is this just a ride !?"

ps No reserves.. hmm, wouldn't that imply for any depositor with an IQ above say room temp.. = BANK RUN !

I first read it in Steve Keen's paper The Roving Cavaliers of Credit, but the observation was first made over thirty years ago:

This first major paper on this approach, “The Endogenous Money Stock” by the non-orthodox economist Basil Moore, was published almost thirty years ago.[4] Basil’s essential point was quite simple. The standard money multiplier model’s assumption that banks wait passively for deposits before starting to lend is false. Rather than bankers sitting back passively, waiting for depositors to give them excess reserves that they can then on-lend,

“In the real world, banks extend credit, creating deposits in the process, and look for reserves later”.[5]

No need for a run on the bank (FDIC)....but your money market account may be a different story.

http://seekingalpha.com/article/195805-u...