3 ms·

No one is showing up at a bank and depositing $1M of physical cash (except maybe Mexican drug cartels). That $1M you're depositing is presumably the liability

No one is showing up at a bank and depositing $1M of physical cash (except maybe Mexican drug cartels). That $1M you're depositing is presumably the liability of another bank.

panarky 4y ago
Doesn't matter if it's physical cash or an electronic ledger since both the electronic ledger and the physical green pieces of paper are liabilities of the banking system, specifically for US dollars they're both liabilities of the Federal Reserve.
- wins32767 4y ago
  > specifically for US dollars they're both liabilities of the Federal Reserve. I don't think that's right. There are banks outside the US that hold US dollars that the Federal Reserve has no jurisdiction over. They create more currency through fractional reserve lending for their local currency as well as any dollar denominated loans they make. I don't see how those are liabilities of the Federal Reserve, but maybe I'm missing something?
  - refurb 4y ago
    Dollars are bank notes “promises to repay”. It used to be many different bank issues notes payable in gold, now it’s one bank - the Fed, and it’s no longer gold. It doesnt matter if the US dollars is held outside the US. The dollar represents a promise by the fed to pay, and thus is a liability to the fed. Of course the fed has the power to create and destroy dollars.
    - wins32767 4y ago
      > Of course the fed has the power to create and destroy dollars. So to banks outside the US. That's how fractional reserve banking works. If I go to the UK and deposit $1m USD, and they loan out $900k of that to you, that UK based bank has created $900k.
- nulbyte 4y ago
  > I don't see how those are liabilities of the Federal Reserve, but maybe I'm missing something? To my sibling: Missing is the fact that US dollars are bank notes issued by the Federal Reserve. Issuing a note creates a liability. https://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm https://www.federalreserve.gov/monetarypolicy/bst_frliabilit...
deleted 4y ago
[deleted]

No one is showing up at a bank and depositing $1M of physical cash (except maybe Mexican drug cartels). That $1M you're depositing is presumably the liability of another bank.

panarky 4y ago

Doesn't matter if it's physical cash or an electronic ledger since both the electronic ledger and the physical green pieces of paper are liabilities of the banking system, specifically for US dollars they're both liabilities of the Federal Reserve.

wins32767 4y ago
> specifically for US dollars they're both liabilities of the Federal Reserve. I don't think that's right. There are banks outside the US that hold US dollars that the Federal Reserve has no jurisdiction over. They create more currency through fractional reserve lending for their local currency as well as any dollar denominated loans they make. I don't see how those are liabilities of the Federal Reserve, but maybe I'm missing something?
- refurb 4y ago
  Dollars are bank notes “promises to repay”. It used to be many different bank issues notes payable in gold, now it’s one bank - the Fed, and it’s no longer gold. It doesnt matter if the US dollars is held outside the US. The dollar represents a promise by the fed to pay, and thus is a liability to the fed. Of course the fed has the power to create and destroy dollars.
  - wins32767 4y ago
    > Of course the fed has the power to create and destroy dollars. So to banks outside the US. That's how fractional reserve banking works. If I go to the UK and deposit $1m USD, and they loan out $900k of that to you, that UK based bank has created $900k.
nulbyte 4y ago
> I don't see how those are liabilities of the Federal Reserve, but maybe I'm missing something? To my sibling: Missing is the fact that US dollars are bank notes issued by the Federal Reserve. Issuing a note creates a liability. https://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm https://www.federalreserve.gov/monetarypolicy/bst_frliabilit...

deleted 4y ago

[deleted]