005 – The End of Fractional Reserve Banking

On March 15, 2020, the Federal Reserve Board of Governors announced that the policy of ‘fractional reserve’ banking would no longer continue as of March 26, 2020 (a day that will live in infamy); as of that date, the reserve requirement would be zero percent for all types of deposits. This will have profound consequences on the financial future of every man, woman, and child in America.

You can read the short, simple, quiet press release here: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315b.htm

You can monitor the bi-weekly changes in reserve balances here: https://www.federalreserve.gov/releases/h3/20200409/

You can view the FDIC changes in the DIF Reserve Ratio here: https://www.fdic.gov/bank/analytical/qbp/2017mar/p13ch1.html
[*Note the last update was December 2018, and the last data point was March 2017. There must be more recent numbers somewhere…].

You can view the FDIC video assuring people that “your money is safe at the banks” here: https://www.youtube.com/watch?v=jdjzIaEDTnw

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Gold vs. Dollar (Market Cap since 1800)

The long-term (220-year) average ratio of market capitalizations is 21.7% Dollars to 78.3% Gold.

The average pre-Fed (pre-1914) ratio is 18.2% to 81.8%.
The average post-Fed (post-1914) ratio is 25.3% to 74.7%.

The all-time-maximum dollar ratio was 39.1% in 1970, immediately before a 10-year bull market in the dollar price of gold (25x), which lowered the dollar ratio to 7.2% in 1980; incidentally, this is the dollar's all-time-minimum ratio.

The second-highest dollar ratio was 38.6% in 2015. If the ratio reverts to the historical low (7.2%), concurrent with a 1970's-like increase in the gold supply (1.2x) and dollar supply (2.4x), then the following values are implied for the year 2025:

  • Monetary base: $9.17 trillion
  • Gold supply: 6.19 billion ounces
  • Gold market capitalization: $118.6 trillion
  • Gold price per ounce: $19,100.00

Worth considering.