You made a statement that was demonstrably false - that banks effectively have no reserves now - which is literally the polar opposite of the truth, as they actually have more excess reserves than ever in history.
Hey Dipshit, WHY do you think their balance sheets show such excess reserves? Interesting, right? curious, right? Why would they just keep that money lying around doing nothing? Doesn't make sense, does it?
That's what I've been trying to tell you: IT'S AN ACCOUNTING FRAUD
No sane businessman would let their money sit idle like that if their whole damn business was lending money.
So why are they doing it? Because that money has already been spent, that's why. It's already spoken for. It's to cover their asses when the loans they know are no good have to be written down. But....here's the really scary part: as much as it is (and it's a shitload, no doubt) it's still not enough. The bad loans are even bigger.
The Fed doesn't really care about "full employment" or "price stability". It is owned by the member banks and does their bidding. If the Fed doesn't pump, the whole damn thing deflates. But there's no patch. No plug for this bad loan hole. All they have is a pump so the hole keeps getting bigger.
The word is "effectively". I'd hoped you were smart enough to know what a qualifier is, but my hope was misplaced.
Well, at least you are consistent: Wrong again.
They are not letting the money sit around doing nothing - well, not exactly. It is making money for them still because, in the same bill in which congress authorized $800B in 'fiscal stimulus', they also authorized the federal reserve to pay banks (i.e., themselves) interest on their excess reserves, with your and my tax dollars. You and me are paying fat cat bankers billions in interest every year to hang onto their own money. You may also notice that almost instantly after passage, the amount of excess reserves rose to ~$800B - that number sounds familiar
And when the Fed added $1.3T in monetary stimulus in QE1, and then another $600B in QE2, excess reserves (interest-bearing accounts for the banksters) went up accordingly.If you believe in the monetarist principles the Fed operates from, there is some logic behind the policy - it allows them to now control interest rates from both the supply AND demand sides - whereas before they only could influence supply. Nevertheless, the sheer volume of current excess reserves is becoming a potential problem even for the Fed, as there is potential for very negative political blowback since the interest is becoming a significant budget item now.
BTW - the name-calling is pretty childish.




