Lord God Bernanke, Savior of the Human Race, King of Omniscient Interest Rate Knowledge, Master of Printing Press Technology, has declared minimum reserve requirements for banks are dumb.
Business Insider reports:
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….
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.
IMPOSE COSTS AND DISTORTIONS?
I think the God King meant to say that “having a private bank cartel impose arbitrary interest rates on the economy, along with a criminal federal government that borrows unlimited cash, imposes costs and distortions on the banking system.”
If the Lord gets his way and minimum reserve requirements are removed, banks would be able to lend unlimited money created out of nothing and backed by nothing.
Think of it this way. If I go into a bank and take out a 10,000 dollar loan, the bank would be able to simply enter 10,000 into my account out of nothing. They simply print money, then get to charge interest on printing money. What a racket.
Nothing would prevent a brand new bank, with no savings holdings, from issuing a trillion dollar loan to a corrupt business or government. No amount of withdraws from the bank could bankrupt it either. Banks would have no incentive to offer any interest on savings at all, since it makes no sense for them to lend out any of their reserves at all – they could just print money to lend instead of taking it from their reserves.
The list of insanity that would ensue from going from a crappy 10% reserve requirement to a 0% reserve requirement are too numerous to list here, but needless to say, real chaos would emerge from such a practice.
There would be no limit on the money supply – and by money I mean debt. Not that there is any real limits now, but come on.
The Lord feels it is in the nations best interest to operate a slave state where people are entirely enslaved to banking oligarchs that hold the keys to the printing presses and use the force of government to collect on the debt they issue.
There is ABSOLUTELY NO DIFFERECE between a loan shark with a printing press and a bank that has a zero percent reserve requirement. NONE WHAT SO EVER!
image from LOLFed