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The bank does have the f* dollar! (And can deposit it at the federal reserve, if somehow you don’t think actual money is good enough to qualify as money.)
by kgwgk 7y ago
The bank does have the f* dollar!
(And can deposit it at the federal reserve, if somehow you don’t think actual money is good enough to qualify as money.)
- b_tterc_p 7y agoIf I ask you to hold my drink, you’re not allowed to drink it. Banks have rights to do certain things with your deposits, but it’s not theirs. They can’t decide to pay salaries and deduct the amount from the deposits. Custody isn’t title.
- kgwgk 7y agoIt is part of M0. It's more "money" than deposits (M1) or savings accounts (M2). In a discussion about money supply it definitely counts as money. And they have it. Yes, they need to keep enough reserves but apart from that it's their money to use as they please (lend, invest, spend, pay dividends...). The deposit is their liability (obviously they can't spend it). The dollar is their asset. When you deposit the money into a bank that dollar is not yours anymore, the bank is not keeping it in custody for you.