[–] fusir 0 points 14 points 14 points (+14|-0) ago (edited ago)
What is this, the 60s?
Where's the part where the reserve amount is 0.1% and can exist as cash equivalent investments and a fed res loan of less than 0% real interest rate can cover any gap in the reserve amount.
Really banks don't get most of the money they lend out from depositors at all. If compared directly to that the reserve amount would be negative. Also the amount deposited impacts the amount lent almost zero. The idea that some proportion like that is relevant to today's system is an imagination.
Instead think of it as two separate businesses. The bank stores your money for free and makes really zero money on it other than a relationship to convince you to have them as your first consideration for other products. Then as a separate business a bank will rent out receipts dripped down through them from the federal reserve. The amount it costs them to get those receipts is slightly impacted by deposits but not in a significant way. So long as the cost of obtaining those receipts (in NPV terms) is less then the value they derive from selling you a loan (in NPV terms) they will sell sell sell a loan, which it's guaranteed it will be because the fed hands out those receipts like they were paper.
[–] rejectedfromreddit 0 points 1 point 1 point (+1|-0) ago
Thanks for the explanation. The diagram makes sense, but I've never heard the counterargument, which is just as logical.
[–] Rawrination 0 points 5 points 5 points (+5|-0) ago
Not so much a counter argument. Just a clarification that the diagram is outdated and optimistic in the extreme.
Modern money almost exclusively exists as data on someone's machine.
Our enemies LITERALLY have the infinite money cheat codes to life. The only thing stopping them from just printing it endlessly all at once is the desire to still be able to acquire real goods and services for that currency before it becomes worth less than toilet-paper.
[–] [deleted] 2 points 8 points 10 points (+10|-2) ago (edited ago)
[–] theshopper 0 points 5 points 5 points (+5|-0) ago
And then comes the federal reserve to create that cash out of thin fucking air.
It's really quite simple how we're all getting fucked, but quite hard to get anyone to do something about it.
[–] [deleted] 3 points -2 points 1 point (+1|-3) ago (edited ago)