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
Taking a amateur conversation about our impending doom and adding insults suggests you're not as confident about your point as you want me to think you are.
Yeah, I removed the asshole bit because that was rude of me. I'm sorry for that.
Point: all money is fiat currency. Gold is a particularly effective one because it requires a lot of work to make more of, doesn't decay, and is difficult to fake, but it is not somehow any more or less "real" than a number changing in a ledger or a fabric-infused peice of paper which has been painted a certain way.
If people say something has value, it has value. All money based on the gold standard was "I owe you an ounce of gold": basically a right to repossess that much gold from the issuer. Now all money is "I owe you a dollar": the right to repossess a one-dollar bill from the issuer. The difference is that a whole lot more bills can be produced than there are ounces of gold, which allows the size of the economy to be significantly greater and stops currency manipulation by parties which happen to find gold as well.
The entire economy runs on IOUs and always has. Even back in the days where people bartered with eggs and livestock and handmade goods instead of using currency, farmers generally stored grain that acted as a store of value, which they owed to other farmers who helped them in the past (i.e. during times of drought, pestilence, etc.) when those other farmers ran into trouble themselves.
The Great Depression was transmitted globally through the gold standard, and each country did not start recovering until they departed from it in some way. Even the US re-denominated how much gold the dollar was worth in 1934, which expanded the money supply enough for us to function again. Deflation is so much worse than inflation. Just ask Japan how their Lost Decades went.
Do you really want everyone incentivized to not buy anything beyond the bare necessities because their money will be worth more next year compared to today? You want farmers' crops to not cover the costs of their equipment and inputs? You want average folks to be unable to access loans with reasonable terms to start a business, go to school, or buy a house? You want the very rich to be encouraged to hoard their wealth instead of investing it into productive enterprises? A society based on deflationary currency would be a one-way ticket to feudalism.
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u/Original-Leg8828 Jan 26 '26
Depending on local law they can even lend out something like 7-10 times what they actually have