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 if there's a crisis will you be able to get any cash out of the bank will the banks even have any cash because as of last March it is no longer a requirement the banks do not have to have a single dollar bill in them this is the the Federal Reserve's a Board of Governors of the Federal Reserve System policy tools reserve requirements page now I've been looking at this page since I wrote my book I've had this like bookmark tonight look at it once and while there's minor changes here and there

they actually the list of changes is all right here throughout the years and they change reserve requirements and what banks have to have to be able to create loans the required reserves and the reserves that the banks have to have are reserves that are at the Federal Reserve so it's the commercial banks account at the Federal Reserve and the first sixteen point nine million dollars worth of loans that they write always had a zero percent reserve requirement they didn't have to have a dime to be able to

create 16 the first sixteen point nine million dollars the bank creates they just type it into your account and then the from sixteen point nine the net from sixteen point nine to one hundred and twenty seven point five million that tranche they actually had to have three percent of that at the the reserve account at the Federal Reserve so if they loaned you a hundred dollars they type up brand-new hundred dollars into existence and they have to find three dollars for they don't have to actually

have it that day they can go out and find it in the interbank lending market where they're all lending to each other at the end of the day when they settle accounts then this was ten percent so he had zero percent three percent ten percent zero percent and zero percent and so that's how currency is created by bank and the reserves that are required for them to be able to create the currency so it's all been taken to zero so this means that the commercial banks can now do infinite currency creation they don't

have to have anything to back it up except your signature on a loan document an auto loan a mortgage you want to do a billion dollar real estate project you know whatever it is they don't have to have anything to loan you they just type brand-new currency into the computer and all of these reserve requirements were changed as an effective March 26 now what's more important though is this report aggregate reserves of depository institutions and you see the required reserve balances and that as of April

now is at zero zero zero all the way across but what's more concerning concerning is if you go down to this table number two this is reserves and this is vault cash - there's a little footnote there - you go down to April no vault cash is required there's this is in millions of dollars so there's 88 billion dollars worth of vault cash available but none of it is required and vault cash is a cost for the bank they don't like vault cash they would rather not have any cash on hand at all imagine

if they didn't have any cash you wouldn't need nearly as many tellers you would only be accepting checks as deposits and those can now be done over an amp so they really would love to get rid of the vault cash this has all the costs of not just the vault and the security in the banks but the armored cars and they buy this vault cash by swapping in reserves that that they're getting paid interest on by the Federal Reserve they swap that for and I believe there's a fee for printing the currency

a very small fee but they're losing the interest when they convert to vault cash and then they have the armored car costs and the cost of the vault and the added cost of security in the bank now imagine banks with no cash is there a need for an armed guard in the bank anymore I mean there's nothing there to steal you can't go in and like you know hold a gun to somebody's head and make them type digits into your account you're gonna get caught so the vault cash eligible - satisfied

reserve requirements that's what the so this is used to satisfy reserve requirements there are no more reserve requirements banks don't have to have any cash on hand and they don't have to have any currency to loan you they can now just create an infinite quantity of currency so that was part of required reserves the vault cash and then all of the reserves when you've got the ten percent reserve ratio was required to make the loans and here it dropped to zero so this was the chart I was waiting

for I would have done this video much much earlier but I was waiting for this chart to come up and you know it says it was updated May 7th and they always actually post the chart after this update so it was a couple days later and all of the daily videos were I've had these tabs open on my web browser since March waiting for this so here you go but now it's a required reserves is zero point zero zero zero and vault cash was a portion of this of the 214 billion eighty eight billion was vault cash now

where did that go it just goes over into another column on the bookkeeping of the banks and the Federal Reserve it goes into excess reserves so this is excess reserves of depository institutions and what you see here is this big jump and the 214 billion that was over in required reserves is part of that the other part of it I'm going to explain in another video down the road because it's very important to understand this but this is excess reserves and the banks are getting paid interest on this it's called the

interest rate on excess reserves all you have to do is type I owe a R in this field here and you'll see the interest rate on the excess reserves so the total assets of the Federal Reserve is about seven trillion dollars and you can see that there's a different angle here I've lined this up so that the chart covers the same date range and this has been slowing down the creation of currency and it's just about to surpass seven trillion dollars total assets remember the assets are equal to the

liabilities plus paid in capital so on the other side of assets that is these this is what they bought by creating currency and the currency and is on the other side in the liabilities column but you'll notice right here that this is slowing down a little bit but when we go back to excess reserves that's speeding up that's so there's a reason for that I'm going to show you in a separate video and it's actually a very important reason to understand so this is the total monetary base so base currency is

all of the federal reserve currency the federal reserve currency is all of the reserves that the bank said all the banks have accounts at the Federal Reserve they're issued these central bank dollars that never leave the central bank the only central bank dollars that leave the central bank our Federal Reserve notes the actual paper notes in our wallets the stuff in your bank account is bank credit that the bank created by typing digits into your account and as you've just seen they don't have to actually have anything to

loan you they just type digits to your account any quantity you want as long as they think that you can pay them back your signature puts a set of handcuffs on you to pay them back and whatever they've lawn do on they can foreclose against so but you know the total monetary base has exploded and we're now about to you know we're getting close to five trillion on the monetary base now before the crisis of o8 this was at point eight point eight five trillion zero point something you know is is my

point here zero point and here we are at five that's a big difference and some of this is starting to show up in circulation this is the m2 money stock which the Federal Reserve says is the largest measure of the currency supply they used to have an m3 and they discontinued that back in march of 2006 it was the broadest measure of the currency supply and you can see that this has gone vertical in just the last several weeks here so from March 9th to today this is going vertical and it has gained roughly two and a half two and a

quarter trillion there it looks like so that's important but of this is what cracks me up they say that this is the broadest measure of the currency supply so of the 17 point it was 17 and 3/4 trillion dollars that's available of the total money stock the largest measure of the money stock twenty point five trillion twenty and a half trillion of the seventeen point five is available instantly this is they call it money I call it currency so this is currency of zero maturity they don't know the

difference between money and currency I do so money of zero maturity they call it money stock and that means currency that is instantly available right now so what they do is they take em to - time deposit and then they add in the big money market funds and stuff and that has really grown here it's taken off you know it was at seventeen point three and now it's at twenty point five so the currency supply is exploding but these money market funds are money market funds over I can't remember the

size of them it used to say down in these notes here but you you can find out on the feds website so this includes the really big money that the brokerage houses are holding and stuff like that and so the bailouts and everything if if you didn't receive so this is what three trillion dollars yeah there's more than three trillion dollars here that is in checking accounts somewhere accounts that are instantly accessible three trillion I have to do the math but you know what if there's 330 million people in the

United States what is your percentage of that 3 trillion and if you didn't get it then it's unevenly distributed and there's something called the Cantillon effect that we've talked about before when you create new currency it steals purchasing power from the rest of society and transfers it to wherever whoever gets to spend that currency first whoever receives that currency gets that stolen wealth so the currency supply around the world is exploding the wealthiest people on the planet are

getting it and it's all coming out of our pockets I want to thank you for watching just remember the banks aren't required to have any cash on hand in case you want some thanks a lot we'll see you next time