The fractional reserve banking is the worst confidence scheme played upon the mankind. It is possibly of the worst of its kind and totally lacks conscience. It is akin to paying a hard working worker- who logs in more than 10 hours a day, away from his family, sacrificing many pleasures of life, with a glossily printed tissue paper. This is totally evil.
Following is an excerpt from my favorite Mogambo's newsletter:
In May 1995, which was eleven long years ago, total deposits in the banks ("savings") were only around $110 billion, and total Loans and Leases on the books of the banks logged in at only $204 billion. And against that, the banks were saddled with $57 billion in Required Reserves.
Now the Total Deposits at the banks are up to $5.2 trillion, which is 47 times bigger than it was in 1995. That's a growth rate of 42% a year, compounded! And total Loans and Leases is now $5.7 trillion, which is 27 times bigger than in 1995, which works out to an annual growth rate of 35% a year!
Yet against that rise in both assets and liabilities, the Required Reserves went DOWN from $57 billion in 1995 to only $42 billion today in 2006! To keep the same 0.518 ratio of Required Reserves against total deposits in the banking system in 1995, the banks would have to have, right now, in Required Reserves, $2.693 trillion! Instead, they have only $42 billion, 1.6% as much!
:) Falkor
Following is an excerpt from my favorite Mogambo's newsletter:
In May 1995, which was eleven long years ago, total deposits in the banks ("savings") were only around $110 billion, and total Loans and Leases on the books of the banks logged in at only $204 billion. And against that, the banks were saddled with $57 billion in Required Reserves.
Now the Total Deposits at the banks are up to $5.2 trillion, which is 47 times bigger than it was in 1995. That's a growth rate of 42% a year, compounded! And total Loans and Leases is now $5.7 trillion, which is 27 times bigger than in 1995, which works out to an annual growth rate of 35% a year!
Yet against that rise in both assets and liabilities, the Required Reserves went DOWN from $57 billion in 1995 to only $42 billion today in 2006! To keep the same 0.518 ratio of Required Reserves against total deposits in the banking system in 1995, the banks would have to have, right now, in Required Reserves, $2.693 trillion! Instead, they have only $42 billion, 1.6% as much!
:) Falkor
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