U.S. Likely to Move from Fractional Reserve Banking to No-reserve Banking

Fed Chairman, Ben Bernanke is calling for an end to bank reserves.

In the footnotes of a speech U.S. Federal Reserve Bank Chairman Ben Bernanke would have given to the House Financial Services Committee on Feb. 10, lies a unique and startling disclosure.

Hosted on the Federal Reserve’s own servers, the written testimony of the bank’s chairman explains in plain text what expanding the Fed’s powers will do.

“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system,” footnote number nine, at the bottom of the page, explains without additional qualification.

This marks the end of even the pretense that reserves mean anything in today’s banking system, or that there are any effective controls on the abusive issuance of money as debt. Read the full article here.

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One response to “U.S. Likely to Move from Fractional Reserve Banking to No-reserve Banking

  1. franko feci-mangiare

    was there factional reserve banking during whoever is fed chairman over the last 10 years??

    or was the fraction just one between paper/coin currency and bank-credit currency where reserves didnt mean anything??

    “the banking system in a position in which it can expand the supply of checking deposits and thus fiduciary media to a multiple of the additional reserves. And thanks largely to Mr. Greenspan that multiple came to be enormous. By December of 2005, it exceeded 126 times. Two years later, it exceeded 160 times.”
    “hese changes left all the financial liabilities that M2 adds to M1 — savings deposits, small time deposits, money market deposit accounts, and retail money market mutual fund shares — utterly free of reserve requirements and allowed banks to reclassify many M1 checking accounts as M2 savings deposits. M2 and the broader measures became quasi-deregulated aggregates with no legal link to the size of the monetary base.[1]”
    http://mises.org/daily/3556

    is the above true?? if it is would it indicate that there really isnt fractional reserve banking? do you have information showing that there is fractional reserve banking?

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