Comments on: Money Out Of Thin Air: Now Federal Reserve Chairman Ben Bernanke Wants To Eliminate Reserve Requirements Completely?

By: William

William — Mon, 23 Apr 2012 18:43:47 +0000

I think what Bernanke meant by minimal is the lowest of the three tiers(not capital, just can’t think of a better word) of reserve requirements. The minimal requirement right now is 0% up to 11.5 Million in demand deposits but since the minimal requirement exists, but is nothing(0), it adds to the administrative procedures at a bank. I don’t think he would ever say get rid of RR, that would be suicidal!

By: Cosmo

Cosmo — Wed, 11 Aug 2010 18:18:14 +0000

It is astounding and yet NOT surprising ol’ Ben is proposing this incredulous abomination in economic policy. What is he thinking? I’ll tell you. He is thinking, “destroy the US dollar as the world’s reserve currency so we can usher in a new global currency held by the world banks.”
There is a world govt coming into power right beneath our noses and it all relies on the death of the US dollar. And watch for staged terror attacks (could be ANYTHING – think, “who could profit from this?”)
I’m glad Ron Paul is wise enough to make it known to the public that this policy is nothing but immoral garbage. I just hope we wake up and listen.

By: Small Time Investor

Small Time Investor — Wed, 07 Apr 2010 10:57:35 +0000

Mish said: “There are no reserve requirements on savings accounts right now. So in regards to a savings account question: What has changed? The answer is “Nothing”.”

Of course Bernanke & pals are not so stupid and they know exactly what they are doing: they have run out of suckers to lend to so are now trying to excite the hardened and indifferent high-saving segment of the public into their old trap of “borrow and burn”.

Yawn. The Emperor’s runners are naked. Next circus trick please.

By: Steve

Steve — Tue, 30 Mar 2010 23:31:12 +0000

If you think Bernanke is right, might I suggest taking all of your cash out of the bank and hiding it under the mattress? If there are no limits, what’s going to happen when they “over lend” and you want to make a withdrawl? You all do realize that as of now if you withdrawl 10k or more out of your OWN account, you are flagged by the government, right? As in you WILL get a nice interogation phone call proding you for information of how and why you withdrew YOUR OWN MONEY from YOUR OWN ACCOUNT! Trust me, it just happened to a friend of mine. And to think, this is just the BEGINNING!!!!!

By: Matt

Matt — Tue, 23 Mar 2010 14:49:53 +0000

We’re doomed, not a matter of IF, but WHEN. 2 years, 5 years, 10 years, 20 years – who knows. But its inevitable. EVERY fiat money system in history has failed. EVERY ONE!!!

By: Mark

Mark — Sat, 20 Mar 2010 23:21:44 +0000

Reserve requirements don’t matter. It’s capital retirements that matter. Reserve requirements are for a banks liquidity, but that is simply not much of an issue in modern banking, where interbank loans are processed by computer in a microsecond. It’s solvency that is the main danger to a banking system, and that’s where capital requirements come in.

And no, this will no lead to an explosion of the money supply. Again, capital requirements are the main determinate of that have have been for a long time. Your Econ 101 textbook “money multiplier” is pretty much nonsense.

BTW, the reserve requirements if the US are very high. Eurozone is 2%, and Canada a several other countries don’t have one.

By: Bob Buffard

Bob Buffard — Sat, 20 Mar 2010 19:28:05 +0000

I agree with this article in general but find at least two major points of disagreement:

1) From the article: “Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest.” Actually if one were to actually study the Federal Reserve System literature you would find that banks at least since 1913 have never actually lent the excess (other 90%) of cash on hand. Commercial banks create money out of thin air just as the Federal Reserve does. It has been a common misconception among the public that banks actually lend their own money or their depositor’s money. They never have in nearly the last 100 years nor will they ever unless we begin to wake up to the fact that we are being robbed blind.

2) From the article: “The U.S. economy is a giant mess already, and we have got a guy at the controls who simply does not have a clue.” This is another common misconception among the people that we have people running our country that do not have a clue. Unfortunately it is we the people that do not have a clue. Most of our leaders, especially those with a financial background are far from clueless. In fact, they know exactly what they are doing.

The idea that putting more money into circulation to get business moving will create prosperity is definitely true in the short-term. However, the biggest problem is that these economic cycles are well planned, are out of our control and in the long run only benefit the small group of people who are smart enough to create them. So if you are one who thinks that the FED pumping more money into the economy is a good idea better learn to enjoy the short seasons of prosperity cause calamity will surely follow. Just ask those who are without jobs and are homeless. Time to grow up and start studying before the final straw is played!!! Expansion and contraction of money is simply the game that they play to slowly erode what little wealth we the people still have.

By: Maynard

Maynard — Sat, 20 Mar 2010 06:18:04 +0000

Seriously, good thinking Ben!
Until we can get this mountain of clogged currency flowing again, we will remain stagnant and the bubble will not bloat to the exuberant levels we expect or deserve.
We must support these illusions if we expect to create opportunities before the reality of valueless money rears it’s ugly head again.

By: ejgej

ejgej — Fri, 19 Mar 2010 23:56:40 +0000

cool, if we eliminate any reserve requirement, even my person can lend money and become a banker, without a dime in my account.
why should anyone of us work hard anymore? let’s be bankers!

By: Jerry

Jerry — Fri, 19 Mar 2010 18:50:59 +0000

I hate to admit it, but Bernanke is right. In-house lending is DEAD right now. By eleiminating the reserve requirements, banks will start to lend again. This will boost the money supply, which is exactly what is needed to get us back on track.

With small business actually able to get financing, jobs will follow and the aconomy WILL recover.