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You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money o

You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money out now, but nobody seems to care.

klodolph 4y ago
I don’t know about others, but I suspect that if the FDIC ran out of money, congress would figure out a way to fund it even if it meant printing money. I am okay with this.
- nostrebored 4y ago
  But liquidity is the issue here. In the event that this happens, how long would it be before you could have access to your funds?
  - klodolph 4y ago
    Why do you say liquidity is the issue? It sounds like you are imagining some specific scenario here.
    - imtringued 4y ago
      He means that the bureaucratic arm may take time to process your insurance claim, after all you aren't the only one waiting for your money.
      - kwertyoowiyop 4y ago
        The answer seems to be “a few business days, usually next next business day” but that likely won’t appease the tinfoil hat crowd. https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html https://www.fdic.gov/consumers/consumer/news/cnfall14/miscon...
- kasey_junk 4y ago
  You don’t need to guess. The FDIC is backstopped but the full faith & credit of the US government. There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depaccounts/confidence/symbol.html https://www.fdic.gov/consumers/assistance/protection/depacco...
iamthirsty 4y ago
While you're correct[0], still the FDIC is guaranteeing it up to $250k. [0]:https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- nostrebored 4y ago
  Right, but the FDIC explicitly says large amounts may take longer in the status quo. The only reason to have money in the bank is for a reasonably safe, liquid form of money. If they aren’t providing safety or liquidity, why should you use them?
  - iamthirsty 4y ago
    They are providing safety and liquidity, your statement is laughable, honestly. The safety is personal — no one can rob your home when you're gone and steal the money under your mattress because it's not under there, it's in a bank. And in regards to liquidity, if you can tell me the exact day, time, and amount you tried to pull out of a consumer bank (large household bank names) and instead of getting cash in hand the bank told you "sorry, we spent your money on loans, we don't have any to give you", I'd love to see it. Bonus points if then the FDIC didn't cover it. Banks provide both safety and liquidity at the consumer level. It would also be a really bad idea to continue to encourage everyone to pull money out of banks and hold it in cash — both economically and personally. People largely benefit from banks existing, that's, well, why they exist!
  - UncleEntity 4y ago
    > Right, but the FDIC explicitly says large amounts may take longer in the status quo. Right, you can’t ramp up the printing presses instantly — which is literally what they would do if they had to. I think people are missing the point that if it ever got so bad the FDIC had to worry about covering everyone your biggest worry would be the roving gangs looking for the Mormon food caches.
- JamesianP 4y ago
  It may be that what the FDIC promises to do is not in sync with what it can actually afford to do.
NovemberWhiskey 4y ago
>We’re doing zero fractional reserve banking now. No; we're not. In fact, banks are positively awash with reserves by historical standards. https://fred.stlouisfed.org/series/TOTRESNS https://fred.stlouisfed.org/series/TOTRESNS
- nostrebored 4y ago
  The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. We are in ZFRB land right now. Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.
  - kasey_junk 4y ago
    You are describing their reserve requirements at the fed itself. Nothing has changed with their A&L requirements from the variety of banking regulators (including the fed & fdic). For comparison there were rumors that Credit Suisse was in trouble when r their asset to liability mix got around 1.65. That is they marked their assets to 165% of their liabilities and it was a major issue.
  - NovemberWhiskey 4y ago
    >The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. No; again. The Fed moved from a 'scarce reserves' regime for monetary policy to an 'ample reserves' regime; that was announced in 2019. Since the 'ample reserves' approach doesn't depend on bank reserves to implement short-term rate management, there wasn't really a need for an ongoing Fed reserve requirement. >Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2. Bank reserves increased hugely from 2019 through the middle of 2021, as you can see from the chart I posted. Although they've dropped somewhat since then, they're still like 75x what they were in say 2007.

You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money out now, but nobody seems to care.

klodolph 4y ago

I don’t know about others, but I suspect that if the FDIC ran out of money, congress would figure out a way to fund it even if it meant printing money. I am okay with this.

nostrebored 4y ago
But liquidity is the issue here. In the event that this happens, how long would it be before you could have access to your funds?
- klodolph 4y ago
  Why do you say liquidity is the issue? It sounds like you are imagining some specific scenario here.
  - imtringued 4y ago
    He means that the bureaucratic arm may take time to process your insurance claim, after all you aren't the only one waiting for your money.
    - kwertyoowiyop 4y ago
      The answer seems to be “a few business days, usually next next business day” but that likely won’t appease the tinfoil hat crowd. https://www.fdic.gov/consumers/consumer/news/cnfall14/misconceptions.html https://www.fdic.gov/consumers/consumer/news/cnfall14/miscon...
kasey_junk 4y ago
You don’t need to guess. The FDIC is backstopped but the full faith & credit of the US government. There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depaccounts/confidence/symbol.html https://www.fdic.gov/consumers/assistance/protection/depacco...

iamthirsty 4y ago

While you're correct[0], still the FDIC is guaranteeing it up to $250k. [0]:https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm

nostrebored 4y ago
Right, but the FDIC explicitly says large amounts may take longer in the status quo. The only reason to have money in the bank is for a reasonably safe, liquid form of money. If they aren’t providing safety or liquidity, why should you use them?
- iamthirsty 4y ago
  They are providing safety and liquidity, your statement is laughable, honestly. The safety is personal — no one can rob your home when you're gone and steal the money under your mattress because it's not under there, it's in a bank. And in regards to liquidity, if you can tell me the exact day, time, and amount you tried to pull out of a consumer bank (large household bank names) and instead of getting cash in hand the bank told you "sorry, we spent your money on loans, we don't have any to give you", I'd love to see it. Bonus points if then the FDIC didn't cover it. Banks provide both safety and liquidity at the consumer level. It would also be a really bad idea to continue to encourage everyone to pull money out of banks and hold it in cash — both economically and personally. People largely benefit from banks existing, that's, well, why they exist!
- UncleEntity 4y ago
  > Right, but the FDIC explicitly says large amounts may take longer in the status quo. Right, you can’t ramp up the printing presses instantly — which is literally what they would do if they had to. I think people are missing the point that if it ever got so bad the FDIC had to worry about covering everyone your biggest worry would be the roving gangs looking for the Mormon food caches.
JamesianP 4y ago
It may be that what the FDIC promises to do is not in sync with what it can actually afford to do.

NovemberWhiskey 4y ago

>We’re doing zero fractional reserve banking now. No; we're not. In fact, banks are positively awash with reserves by historical standards. https://fred.stlouisfed.org/series/TOTRESNS https://fred.stlouisfed.org/series/TOTRESNS

nostrebored 4y ago
The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. We are in ZFRB land right now. Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.
- kasey_junk 4y ago
  You are describing their reserve requirements at the fed itself. Nothing has changed with their A&L requirements from the variety of banking regulators (including the fed & fdic). For comparison there were rumors that Credit Suisse was in trouble when r their asset to liability mix got around 1.65. That is they marked their assets to 165% of their liabilities and it was a major issue.
- NovemberWhiskey 4y ago
  >The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. No; again. The Fed moved from a 'scarce reserves' regime for monetary policy to an 'ample reserves' regime; that was announced in 2019. Since the 'ample reserves' approach doesn't depend on bank reserves to implement short-term rate management, there wasn't really a need for an ongoing Fed reserve requirement. >Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2. Bank reserves increased hugely from 2019 through the middle of 2021, as you can see from the chart I posted. Although they've dropped somewhat since then, they're still like 75x what they were in say 2007.