Re: Feds invent new scam to transfer tax payer's money to banks

On Apr 30, 7:07=A0am, Money Man <Mo...@[EMAIL PROTECTED]
> wrote:
> visualseep...@[EMAIL PROTECTED]
 wrote:
> > Federal Reserve policymakers will discuss paying interest on
> > bank reserves in a closed door meeting on Wednesday.>>

Money Man wisely asks some excellent questions. Allow me to try to
answer. I don't know the answers but just to get the discussion going
----->

1. What does paying interest on reserves mean? Answer: Banks must set
aside money to pay depositors when required. Under a fractional
reserve system, banks can lend out more than they have on hand. There
are all kinds of controls and laws on this. The idea is to prevent a
run on banks. Banks do not get paid interest on their reserves.
Reserves must be very, very available, not invested by the bank, like
vault cash. Why shouldn't they earn interest?

2. Who would be paying the interest? The banks would need to put the
reserves to work. But they must put it to work so that the money is
available on demand. How do they do this? I dunno :) This may be the
fly in the ointment.

3. The banks would be the recipients of any interest they earn. This
would be an income source banks do not now have.

4. The interest rates would be set by whoever the banks can arrange to
submit their reserves monies to. Probably investors who can use short
term, readily available monies.