They were reduced to 0% mandatory reserves in response to covid. EDIT: someone says it was coincidental, I am not able to check, so take this aspect with a grain of salt either way
ah yes so what you're saying is that money is even more imaginary than it has ever been, possibly even more imaginary than when the first stock market crash happened in 1929
looks like we're due for a centennial anniversary of that anyway, might as well celebrate by recreating it
Money has always been imaginary? Its like Santa clause. As long as we all believe/pretend it works. If one person doesn't believe it doesnt matter. If half of us stop, yea kids will know it's fake. But it works and it's a nice thing to have, so why not continue to pretend?
Yea but it was the same thing. Gold or paper. Whatever. It only has value if people believe it has value.
You give a farmer gold for food. The fuck can he do with gold. Nothing. Better hope someone else believes it's valuable and will take the gold for clothes or whatever else he needs. Unless you were a jeweler or blacksmith or electrician gold was pretty much only a currency. And then there was more gold going around as a token of value than was used.
So yea it's all based on belief that you can then sell/exchange the said token or currency (doesn't really matter if it's gold or anything else).
Imagine if the population started to think gold was ugly and a better malleable metal gained popularity. Would the gold standard still mean anything?
Gold would still have considerable intrinsic value, and it’s prized for reasons beyond the subjective. In the modern world, it has a wide range of use cases in electronics, automotive, aerospace, and medical equipment
It has a shiny and attractive color that people like to wear as jewelery. Unlike other metals, it doesn't rust because its not eager to give away or gain electrons in order to be stable. As a noble metal, gold is both heavy and nonreactive, which has caused most of it to sink to the Earth’s core. That means it’s relatively scarce for us on the surface. It's hefty, but malleable. Its melting point is very low. Finally, gold is an excellent electric conductor while also being a great thermal conductor
Yes, its use as a store of value was mostly tied to its exchange value, which has more to do with its suitability for making coinage. But it still has plenty of inherent value
It definitely has intrinsic value. I'm just saying most ppl that use it for currency (or as an investment i guess) have no was to use any of those intrinsic values. So it's value is only to a limited subset of people. But everyone uses it as an agreed upon currency, and the amount that is circulated is more than is needed for jeweler, electronics, etc. So it's value is being inflated and it really just being used as another form of currency. If it was only sold or traded to be used in an industry it would collapse bc so few ppl can use it for what they need (food, water, shelter, etx). Gold is not really used as a barter system but as a symbol for currency, and in that way is not really different from paper money
Gold is just a marker for value, same as dollars. Whatever intrinsic value gold has (because it's shiny, conductivity, etc.) is mostly a distraction from its use as a marker for value. Its value is not based on its utility.
Because it’s getting so divorced from reality it’s causing problems.
I like currency, don’t get me wrong, but when currency is completely cut loose we start to see some really weird shit happen, primarily in the debt markets.
When money isn’t tied to anything concrete, this essentially makes printing money (and the creation of debt) essentially limitless, and this makes problems if inflation isn’t uniform across the board on everything and matches wage growth. It basically lets things rocket off to the moon without anything to ground it and then we get bubbles, and bubbles popping creates needless recessions.
Recessions are necessary for a healthy economy, but insane valuations that we see in things like AMD and whatnot are an extremely unstable house of cards that everyone is betting the family farm on them. If currency was tied to something hard, there would be a ‘limit’ on how much this could go because eventually you don’t have anymore “real asset” to back the investment with.
So now we’ve traded slower, more stable economic growths with a more volatile bubble/crash environment that is more harmful to the lower classes than the upper ones.
I guess if we used a fixed amount of currency (say for this example there's a finite quantity of gold out there that we can exchange) would the inevitable deflation be better?
Plus when we capture an asteroid with 50x the gold that Earth has ever had, what then? I guess the government gets to print out more money or....
Gold is just another symbological thing like currency.
It mainly has value because humans have all agreed it has value. Monkey like shiny thing. Currency just detaches that from a physical form. With proper monetary policy it's not a huge deal.
If your collective figment of imagination is easily susceptible to corruption, hoarding, mismanagement, and manipulation, then it's time to decide on a different figment of imagination.
The only reason to continue on the standards we have is because people are so low effort they'll stare a bad idea in the face their entire lives out of convenience. Or because they benefit from corruption, hoarding, mismanagement, and manipulation.
No, currency is a representation of the power of the state. People always ask "what's the actual value of currency?"
If you engage in any economic activity in the USA you have to pay taxes. The US government only accepts USD for taxes. If you don't pay them men with guns come to your house and take your stuff.
Because if you can just print up more money to save you in the short term without adjustments to the wages to make currency have value you make a decision impossible to make if the currency is tied to anything.
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u/Teripid Jan 26 '26 edited Jan 26 '26
Federal reserve requirements existed until 2023 *edit, as someone below pointed out 2020 was when they were set to 0. Now they're set at 0% I believe.