Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: smolejv@gmx.net who wrote (11806)	12/12/2001 11:21:07 PM
From: LLCF	Read Replies (1) of 74559

I'm assuming that 100% reserves is simply eliminating the fractional system.... somewhere in history it probably ment that banks just held the money for safe keeping, we're obviously not going back to that, nor does the Austrian school advocate it that I know of [see Rothbard quote]. Today the meaning of 'reserves' against demand deposits is cash on hand and deposit at the Fed neither of which earn any interest. Current reserves in this form are 10% I believe except much smaller for the first bit of deposits... I forget exactly what. Requirements for savings and CD's I think are zero like my model. The problem is none of this has to do with the highly leveraged and grey area of lending/borrowing many times against capital [depending tier 1-?] and other assets like [borrowed?] government bonds: bis.org DAK

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