Fed abolishes bank reserve requirement completely

Discussion in 'Political Issues' started by serve_and_protect, Mar 27, 2020.

  1. serve_and_protect

    serve_and_protect

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    The "reserve requirement" is the amount of depositors' money (either in actual hard cash, or on the bank's balance sheet thus available for electronic transfer) that a bank is required to have on hand at all times.


    For most banks (those with total deposits over $122 million), until yesterday the reserve requirement was 10%.

    In other words, if XYZ Bank has $1 billion in deposits from customers, XYZ Bank is required to keep at least $100 million in cash (or available for electronic transfer) at all times.

    This is to make sure that banks have enough money available, if customers would like to withdraw money that they deposited in their bank accounts.


    That all changed yesterday, when the Fed dropped the reserve requirement to zero percent.


    Yes, you read that right. Zero percent.

    So as of yesterday, XYZ Bank is no longer required to keep any cash on hand (or as money on their balance sheet).


    I think this is a pretty disturbing sign.


    I'm not saying that you should necessarily run out to the ATM right now and empty your accounts and put the cash in your safe.


    Just be aware that banks are no longer required to keep ANY cash (or electronically transferrable funds) on hand anymore.




    Here's the announcement on the Fed website:

    https://www.federalreserve.gov/monetarypolicy/reservereq.htm
     
  2. pittpa

    pittpa What did I come in here for?

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    Cash is dirty.
     
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  3. PSUEng

    PSUEng

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    Yeah, you might get C19 if you handle cash.
     
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  4. serve_and_protect

    serve_and_protect

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    I wonder if The Powers That Be are going to try to use the COVID crisis to move America toward a cashless society? "Never let a crisis go to waste."


    In many European countries, they have already been moving toward a cashless society for several years.

    Will that happen here too? (Spoiler: eventually it will.)

    If you've read the Bible, you know what happens after that.
     
  5. jeanderson

    jeanderson Making America great again! Platinum Member

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    There’s $15 trillion dollars of mortgage debt. How much of that is owed by people who just joined the unemployment roles?

    If mortgages start collapsing, banks are going to take a hit as well. And now, the Fed eliminates the reserve requirement. If I didn’t know better, I would think government is doing everything possible to bring down the country.
     
  6. rj1939

    rj1939

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    What can possibly go wrong?
     
  7. rj1939

    rj1939

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    There was a provision in the bill for "digital dollars" and an electronic wallet.
     
  8. bdcochran

    bdcochran

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    No.
    If it wanted to bring down the country, it would insist that the tax returns be filed on time. The federal government would not be asking mortgage and car loan lenders to forebear on foreclosures and repossessions. It would not extend terms on student loans and defer interest. It would not be giving $1200 checks (reportable as income) to existing federal tax payers. The federal reserve would insist that the reserve requirement remain the same to hinder liquidity in the economy. The fed would not be reducing interest rates to zero.

    Do absolutely nothing - depression results. These measures - try to avoid a depression and settle for a drawn out recession.

    Your choice!
     
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  9. rj1939

    rj1939

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    Whether the Fed's motives are noble or nefarious, I'm not sure that they can conjur enough money to make this thing change directions. Even promises of unlimited liquidity and buying literally everything, have only calmed things temporarily.
     
  10. Guss

    Guss

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    Has the Great Depression been forgotten already? 9000 banks failed during the 30's. I think I may shift my cash into something else.
     
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  11. nevernuffglock

    nevernuffglock

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    Silver and Gold, Silver and Gold....

    This stimulus is a scam, we are getting fleeced. Especially if they keep passing other “phases” that I keep hearing about. This is a transfer of wealth. Why do you think Nancy Pelosi has a stack of papers ready to go with crap she wanted money for. These don’t just appear out of nowhere. Some stuff was pulled but much of it wasn’t.
     
  12. bdcochran

    bdcochran

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    As my memory serves me, only one bank is not federally insured and it is located in Las Vegas.

    If you are old enough, think about how the insured accounts were handled in 2008. YOu don't remember? Limitations on how much you can withdraw.

    Remembering that, I started withdrawing funds in January and was told at my bank to call a couple of days ahead. The first thing you will feel is a credit card limiting your available credit. I have an 850 score, nothing currently owing on a credit card and received a notice of reduced credit limit from a card issuer last week. You can expect the same. Businessmen with lines of credit and the ability to THINK have been drawing down the lines of credit before needing them.
     
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  13. rj1939

    rj1939

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    The FDIC has felt the need to put out a video telling you your deposits are safe and there is no need to withdraw money.
    Probably nothing.
     
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  14. JohnH

    JohnH Millennium Member

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    Our choice? LOL!!!! The Great Depression was cause by misguided Government economic policies that prolonged the crisis. The prudent thing to do would be to let the many insolvent governments, corporations, pensions and individuals go bust and liquidate the debt. This actually happened before the formation of the FED and the economy went through a sharp two year depression and then quickly recovered. There will be no recovery until massive amounts of debt are written off. Helicopter money is not the answer. All fiat money/fractional reserve monetary systems end up worthless. The only reason the U.S has gotten away with this for such a long time is because we are the reserve currency of the world. Time for a reset and a massive downsizing of government.
     
    Last edited: Mar 29, 2020
  15. JohnH

    JohnH Millennium Member

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    Absolutely correct! We are definitely getting fleeced.
     
  16. teeceetx

    teeceetx

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    Cash has NEVER been a smart way to hold wealth. Try gold.
     
  17. JohnH

    JohnH Millennium Member

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    Great video on the subject. Lengthy, but well worth watching.

    View: https://m.youtube.com/watch?v=ZlTHjAuqRHs
     
  18. serve_and_protect

    serve_and_protect

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    I'm not sure I'd trust the FDIC.
     
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  19. Borg Warner

    Borg Warner

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    That sucks...What if there's a run on the banks? Just look what's happening with ammo and toilet paper!
     
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