Why reserve requirements are zero

[Anonymous No.54393240]

So over the past few weeks it has become a common /pol/ tourist talking point that the fed has set reserve requirements to zero during covid.

They paint this as the banks have no money, and the reserve requirement must be zero.

The actual reason they did this is because they only pay out interest on EXCESS reserves. These large banks aren’t beholden to fed rules, they are beholden to more global regulatory frameworks like Basel. Chinese and European banks will not be doing business with an American bank that has less than 10% reserves on hand, no matter what the fed requirements are. The only reason reserve requirements are at Zero is so that large banks can hold this cash on deposit with the fed and get paid for it no matter what. This actually incentivizes MORE reserves, as the banks will not need to lend cash recklessly if they receive risk free interest on their cash.

[Anonymous No.54394445]

Bumping cuz /pol/ tards need to know how money works

[Anonymous No.54394885]

reserves are at 0 because that's the exact same as they being at 10% or even 99%
the money was stolen through debasement from credit creation
credit creation needs to entail risk
if there is no risk, only one thing is guaranteed
guaranteed to lose money

[Anonymous No.54396391]

>>54394885
It wouldn’t be the same, reserves are zero interest bearing cash, and cannot be loaned. Cash on reserve directly influences the available credit.

What’s more important with reserve requirements is that IOER dictates the viability of holding cash reserves for banks

[Anonymous No.54398490]

>Banks have no money and thats a good thing you chud!

[Anonymous No.54399452]

>>54398490
But they do have money. Average cash on deposit at the fed is 10%, and the fact that these are all interest bearing reserves actually contributes to that.

[Anonymous No.54399596]

>>54393240
There’s really no point in trying to educate polcels. They cry about the “collapse of the west” while wishing for exactly that to happen. You really think one of these retards has enough braincells to understand anything about banking?

[Anonymous No.54400670]

>>54393240
Excellent thread, therefore it will be ignored by the majority.

[Anonymous No.54400784]

>>54399596
>>54400670
Thanks anons. I think it’s an important distinction to note, the discussion this does open up however is why would the government require reserves that it’s just going to pay interest on, and wether the fed is trying to go around this by putting the requirement to zero so it can pay out reserves

[Anonymous No.54400845]

>>54396391
>It wouldn’t be the same, reserves are zero interest bearing cash, and cannot be loaned
good
if I wanted to loan the money, I would buy a bond
but the general public is too fucking retarded to understand that by giving away their money for a "savings account", they are essentially destroying their own money
a bond is only good if risk of default is involved
otherwise, it is just guaranteed to lose money

and in the case of general deposits, guaranteed to also devalue the entire national currency through credit

[Anonymous No.54400883]

>>54399596
>“collapse of the west”
buzzword trying to pass yourself as an adult
in reality, the fractional reserve system created enough credit to crater the world's reserve currency

if you have a collateral guaranteed to go down, going short on it (loan against the dollar) is the easiest decision anyone can make
it's what explains the generational bull market in treasury bonds and the closest thing to credit creation: securities

[Anonymous No.54400978]

>>54400845
>if I wanted to loan the money I would buy a bond
Banks theoretically do that for you though. They get better financing than you because they are bigger than you, and can find better returns as such. Banks act as a middleman matching money creation to money consumption.

>so they can devalue the currency through credit
Inflation happens after credit expansion but before contraction in bubble, which is good for you during the expansion phase if you have assets denominated in the currency

[Anonymous No.54401012]

>>54393240
>le pol bogeyman

kikeposting trying to gaslight idiots into thinking everything will be all right, right until the currency collapse

[Anonymous No.54401063]

>>54393240
>>54394445
Insanely retarded poster. You get a jewtube link that explains how this works and why you are a dipshit, nothing more.
https://youtu.be/iFDe5kUUyT0?t=1102

[Anonymous No.54401428]

>>54401063
Reserves are determined by liquid assets in the bank, hour long documentaries need not apply

>>54401012
Or someone who actually put in the legwork to learn

[Anonymous No.54402250]

Bump

[Anonymous No.54402266]

>>54393240

Cool it with the antisemitic remarks.

[Anonymous No.54403540]

>>54402266
Not even, the bankers get a bad rap but zero reserves shouldn’t be one of them right now

[Anonymous No.54403843]

>>54393240
>the fed reduced the reserve requirement to 0 so banks will hold more reserves.

LMFAO

[Anonymous No.54403935]

>>54403843
Well, yeah a little bit. What do you think happens to the other 90% of a banks balance sheet when the 10% cash is yielding vs when the 10% is not? That’s a huge yield spread to make up, and could actually drive overall liquidity and credit down