What Is Fractional Reserve Banking?

Fractional reserve banking is a system where banks are only required to keep a fraction of bank deposits on hand. That means your bank holds a percentage of your money, lending the rest of it out or investing the money to grow their total available funds.

Banks can use these loans to stimulate the economy, making cash more available to those who need it. This provides more opportunities for people to do things like buying a house or starting a business.

Historically, the Federal Reserve set the reserve requirements on transactional accounts — such as checking and savings accounts — at 10%. So, if you had $10,000 in your savings, your bank could use $9,000 of it.

However, as of March 26, 2020, the Federal Reserve no longer requires US banks to keep money in reserve for transactional accounts. The idea is that this money is better used if freed up to lend, stimulating the economy. With these loans, banks can charge interest to pay for their expenses and grow their business, freeing up more money to be lent.

More…

Related Article: No Bank Account Is Safe in 2023

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If you read and understand the information in the above two articles, you know (or hopefully already did know) how much of a fraud the US banking system how become. There is no need for me to expand on this topic: you either know about it or do not care.

The next phase of stealing what little of our wealth is left after taxes and inflation will be the conversion to digital dollars. The mark of the devil currency will become law. I hope that many of you will go Galt and only participate in a barter system at that point.

David DeGerolamo

      
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Nolan Parker
Nolan Parker
2 months ago

It’s been this since 1913. Except for decoupling from gold. The banking scheme is the same. If you’re wanting to have it explained clearly either read Creature from Jekyll Island or watch G. Edward Griffin videos.

Fido
Fido
2 months ago
Reply to  Nolan Parker

Actually, fractional reserve banking is older even than fiat currency. Back when all money was was gold and silver itself, people could keep their money in the safe of a goldsmith, for a fee. In a small community where everyone knows and trusts the goldsmith, his receipts are as good as the gold in his safe. People could trade receipts in the market (at least with locals) nearly as well as the gold itself.
In this scenario, the temptation for the goldsmith to create fake receipts, or to sell or loan the gold that never leaves his safe, can become too great.
Now imagine many such goldsmiths loaning gold to the king to pay mercinaries in a war…. and war then drives people to get the gold back out of the safe. That’s a run on the bank. (the goldsmith has magically become a bank) The point is that the receipts have become money now, supposedly backed by gold, but the gold was loaned out. This is clearly illegal, but if the king prosecuted him, what happens to the war funding? So the king effectively legalizes the practice. The beginning of fractional reserve banking.

Stan Sylvester
Stan Sylvester
2 months ago
Reply to  Nolan Parker

Great recommendation!

Quatermain
Quatermain
2 months ago

Digital currency (CBDC) and gun confiscation, not necessarily in that order, are the last two nails to be driven into our collective coffin. In my view it is no longer an if but a very soon, when.

Buckeyebob
Buckeyebob
2 months ago

I think that many patriots would be better off using the digital system as long as possible. It can be used to purchase things that will have value and even be used for barter . After the 666 mark is brought out it will be over for us that live by faith but until then I’m buying all I can get to prepare. Brass and lead first. I just bought a new Kia that’s getting close to 50mpg . Tell me that won’t be valuable in 5 or 10 years.

Buckeyebob
Buckeyebob
2 months ago

Wise as serpents but gentle as doves. You have the dove part down now get the wise part.

Charley Waite
Charley Waite
2 months ago

I teach this in both Economics class and US History classes (bank panics). However I did not know the FedGov set fractional reserves to zero as of 2020. Thank you. This changes the lecture.

Fido
Fido
2 months ago
Reply to  Charley Waite

yeah, huh? KInda gives away the whole point, doesn’t it. 🙂

Dan
Dan
2 months ago

The ONLY money you should have in the bank or the stock market these days is money you can AFFORD TO LOSE.

Swrichmond
Swrichmond
2 months ago

IIRC as a bank depositor you are an unsecured creditor of the bank, putting you in the back of the line of creditors to receive settlements from a bank which has gone bust.