Bernanke Wants to Eliminate Reserve Requirements Completely

[PubliusInfinitum]

Bernanke Wants to Eliminate Reserve Requirements Completely

"Up until now, the United States has operated under a "fractional reserve" banking system. 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. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website...."


I just ran up on this article this morning... not saying that it's true; but if it is... we are beyond screwed.

What do YOU think?

 

[Ravi]

Color me surprised. I thought you were a free market, no regulation type of guy, Pubic.

I wonder if you'd be upset about this under a Republican administration.

 

[Contumacious]

Ron Paul (R-TX) wants to eliminate the Federal Reserve Board completely.

.

 

[Kevin_Kennedy]

Fractional reserve banking is a massive fraud on anyone who deposits their money in a bank, but no reserve banking would be even worse. The only thing we should be moving towards is 100% reserve banking.

 

[editec]

Bernanke Wants to Eliminate Reserve Requirements Completely

"Up until now, the United States has operated under a "fractional reserve" banking system. 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. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website...."


I just ran up on this article this morning... not saying that it's true; but if it is... we are beyond screwed.

What do YOU think?

I think that if you believe REGULATING CAPITALISM is bad, then you cannot object to this DEREGULATION.

However, if you do understand that markets need regulation, then you might object to this plan as essantially boneheaded.

But given that our entire system is boneheadedly stupid, and DESIGNED to benefit a very small class of our overall population, this doesn't really much surprise me.

Banks and the monied class OWN this country folks.

Hell the whole capitalization of banks concept was basically thrown away a long long time ago, anyway.

I ALSO want the right to loan money I do not have to other people at interest.

I have no money, so clearly I am as financially prepared to do it as most major banks are.

 

[Toro]

The guy who knows most about these things is gonegolfin. Hopefully, he will post here.

As I read it, Bernanke is talking about the reserve balances at the Federal Reserve, not reserves altogether. Banks would still have to have minimum capital requirements. This may or may not be a good idea but I don't think he is proposing to get rid of reserves in general. If so, that's a terrible idea.

In fact, the government is likely to go the other way and increase reserve requirements. Of all the proposed regulations, this is probably the best one.

 

[Mr.Fitnah]

This will cool off the printing press for a day.

 

[PatekPhilippe]

Color me surprised. I thought you were a free market, no regulation type of guy, Pubic.

I wonder if you'd be upset about this under a Republican administration.

What? You can't be serious...this would NEVER be proposed under a Republican Administration....the reason it's proposed now is Bernanke sees the governments willingness to step in and give banks BILLIONS of our tax dollars if they lose it all in some scheme!!!! Are you a supporter of this socialist crap?

 

[beowolfe]

Color me surprised. I thought you were a free market, no regulation type of guy, Pubic.

I wonder if you'd be upset about this under a Republican administration.

What? You can't be serious...this would NEVER be proposed under a Republican Administration....the reason it's proposed now is Bernanke sees the governments willingness to step in and give banks BILLIONS of our tax dollars if they lose it all in some scheme!!!! Are you a supporter of this socialist crap?

I know it's hard. But try not being a jackazz all of the time! It was a REPUBLICAN administration that GAVE the banks billions. WAKE UP!!!

 

[PatekPhilippe]

Color me surprised. I thought you were a free market, no regulation type of guy, Pubic.

I wonder if you'd be upset about this under a Republican administration.

What? You can't be serious...this would NEVER be proposed under a Republican Administration....the reason it's proposed now is Bernanke sees the governments willingness to step in and give banks BILLIONS of our tax dollars if they lose it all in some scheme!!!! Are you a supporter of this socialist crap?

I know it's hard. But try not being a jackazz all of the time! It was a REPUBLICAN administration that GAVE the banks billions. WAKE UP!!!

Are you refering to TARP...THAT'S BEING REPAID AS WE SPEAK unlike your Lord and Master Obama's great giveaway to Wall Street? Yes...you should take your own advice dumb ass.

 

[PubliusInfinitum]

ROFL...

Sweet mother...

Whatta mess...

What this says; if its true, is that we're on the precipice of total, irretrievable failure. Absolute economic collapse; the responsibility for which is being SETUP to be the BANKS... OKA: Capitalism.

"Those banks TOOK ALL OF THE MONEY AND PUT IT IN THEIR POCKETS! Banks are capitalist and this proves ya can't trust Capitalism..."

When in truth... the policy was set by PROGRESSIVES... the result will be the predictable failure of LEFTISM... which in TRUTH simply proves that ya can't trust LEFTISTS with Capital... and why not?

Well because as far as they're concerned: THEY'RE ENTITLED TO IT... ALL OF IT!

Doesn't matter where ya keep your money folks... cause when this plays out, MONEY... meaning currency... meaning US Dollars will be worthless; whether they rest in a savings account, checking account or are neatly laid out by the pallet in the basement.

What WILL be worth something is your means to trade your product and service for the product and service possessed by someone else. Which is at the end of the day: CAPITALISM...

With regard to the Fed and the Banks THEY REGULATE: If you take someone's coin and promise to secure that coin against theft or loss... and go to work extending yourself beyond the means to do what ya promised... you're a THIEF; and where ya do so while acting as a REGULATOR of a psuedo-government entity, well then you're a Leftist...

And that's all we're really talkin about here... straight up: DECEIT, theft and fraud...

The recent banking meltdown that we're NOT EVEN CLOSE TO GETTING THROUGH was a result of fractional banking... with the fraction which was being held in reserve being WOEFULLY INADEQUATE, against the liabilities which the progressive foisted upon the industry through their "Fairness in Housing" farce... and here we SEEM, at least, to have the FED CHAIRMAN claiming that we need to reduce to reserve fraction to ZERO...

Folks, that is economic suicide... plain and simple. It can be recognized as NOTHING SHORT of economic subversion...

My prayer is that the article has misrepresented the Chairman's position; and the citations which hope to prove otherwise are fraudulent...

I'd hoped that our in-house economic gurus could shed some light on it... but such seems to be offline at the moment.

 

[sparky]

are we referring to this part>>>>??

As a second means of draining reserves, the Federal Reserve is also developing plans to offer to depository institutions term deposits, which are roughly analogous to certificates of deposit that the institutions offer to their customers. The Federal Reserve would likely auction large blocks of such deposits, thus converting a portion of depository institutions' reserve balances into deposits that could not be used to meet their very short-term liquidity needs and could not be counted as reserves. A proposal describing a term deposit facility was recently published in the Federal Register, and we are currently analyzing the public comments that have been received. After a revised proposal is reviewed by the Board, we expect to be able to conduct test transactions this spring and to have the facility available if necessary shortly thereafter. Reverse repos and the deposit facility would together allow the Federal Reserve to drain hundreds of billions of dollars of reserves from the banking system quite quickly, should it choose to do so.

~S~

 

[Avatar4321]

That seems rather insane to me. What's the point of the Fed then? Let's just eliminate it if we are going to do that.

 

[86DuDE]

Ah yes, making it easier to make more money out of nothing at all!

 

[Neubarth]

Ah yes, making it easier to make more money out of nothing at all!

That, of course makes it possible for us to borrow money at zero interest. If we can continue to do that we can finance deficit government for eternity. That looks like a damn good deal to me. Interest free loans are a damn good thing. Right? Is there anybody dumb enough to argue against that. In creating the FED we have created the most perfect lending institution. We can borrow at no interest for all eternity. Can you think of a better deal?

 

[Kevin_Kennedy]

Ah yes, making it easier to make more money out of nothing at all!

That, of course makes it possible for us to borrow money at zero interest. If we can continue to do that we can finance deficit government for eternity. That looks like a damn good deal to me. Interest free loans are a damn good thing. Right? Is there anybody dumb enough to argue against that. In creating the FED we have created the most perfect lending institution. We can borrow at no interest for all eternity. Can you think of a better deal?

We can also destroy the currency.

 

[Toro]

Here is a good explanation of what Bernanke is proposing.

Mish's Global Economic Trend Analysis: Bernanke Wants to End Bank Reserve Requirements Completely: Does it Matter? What Chaos will Result?