/biz/ - Business & Finance

>>49722046

It's really hard to nail down exactly where all that M1 went, who has it, and how it's affecting overall money supply.
It's not in people's savings accounts; national savings rates are at 15 year lows.
It's not in homes; the vast majority of that is credit, because no one buys homes with cash.

The thing that concerns me most, more than M1 surge, more than overnight reverse repo above $2.2T and repo being (seemingly) unpublished by the Fed for the last 18 months, more than the stock market mooning during a pandemic/shutdown, is the fact that banks no longer have reserve requirements.

They don't actually have to have a positive net asset balance to lend against.
They can just create money out of thin air with nothing in their vaults.
The only thing stopping this is what their shareholders think of the amount of leverage on their books.
If that tide ever starts to turn...oh boy.