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Is there an easy way to understand how the lack of a reserve requirement doesn't turn banks into infinite money machines? Edit: Perhaps banks are infinite mone
by jakehansen 4y ago
Is there an easy way to understand how the lack of a reserve requirement doesn't turn banks into infinite money machines?
Edit: Perhaps banks are infinite money machines, but what consequences do banks face that prevent them from writing blank checks?
- nullish_signal 4y agoConsequences? Those are for Plebeians, since the Federal Reserve can just print more money. From 2020: "Inflation Baked In As U.S. Money Supply Explodes" https://www.forbes.com/sites/investor/2020/06/26/inflation-baked-in-as-us-money-supply-explodes/?sh=27f7f0ed7829 https://www.forbes.com/sites/investor/2020/06/26/inflation-b... "A 33% increase in M1 (the most liquid portions of the money supply) in the last 12 months. A 105% increase (if you annualize it) in the last three months to May. You’d say that’s a 33% inflation rate baked in, right now."
- totony 4y agoThey have eliminated reserve requirement, but there still are capital requirements.