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On February 15 a friend called me today to ask how much money the banking system could have created on $100 in 1947. I dug into my files and into the St. Louis Fed’s data On February 15 a friend called metoday to ask how much money the banking system could have created on $100 in 1947. I dug into my filesand into the St. Louis Fed’s data databases, and couldn’t find figures for 1947, but did find figures for 1959, and some other fascinating facts. From 1 March 1959 to 13 March 2006, the reserve requirement dropped from 6.8% to 0.61% — that’s right, to less than one-tenth.
(Remember that I calculate the reserve requirement differently to economists. I just take all the money the banking system is holding as reserves, a figure the Federal Reserve of St. Louis gives, and divide it by the total the banking system owes to depositors. That avoids wrangling with all the separate reserve requirements for different classes of deposits. Besides, as I understand it, that is the correct reserve requirement percentage, regardless what they say. It’s the amount of reserves the banks are required to hold on that total amount of deposits. End of discussion.)
I called Research at the St. Louis Fed and the very nice Czech lady who answered the phone, after some toe-tapping, came around to explain that the reason I could no longer get the “Total Time & Savings Deposits at all depository institutions” figure was that they stopped publishing that when they stopped publishing M3. BUT, I could still get everything it contained except “Large Time Deposits.” That they discontinued keeping. Large Time Deposits. Wonder why? If you were going to commit a murder, wouldn’t it be
a good idea to make the body vanish before you committed the murder, so you wouldn’t have to worry about troublesome clues that might lead to you? Since the Fed’s published reason for discontinuing the M3 money supply measure was ridiculous, they did it for another reason: at some point in the future, they don’t want us to know what it is. Specifically, they don’t want us to know what “Large Time Deposits’ are. Anyway, if all this is a meaningless exercise, it’s worth noting that since 1959, the banking system’s power to create new money has increased tenfold. In the meantime, they have increased total bank deposits nearly 26 times. That is not a measure of success and prosperity, but a measure of inflation and slavery.