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blackbootz · 1713 days ago · link · · parent · post: Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program
And they also eliminated reserve requirements--dropped them to zero--for thousands of commercial banks. Not sure if that includes the big ones, but in an effort to boost spending, the Fed is pushing banks to have nothing in reserve. That seems cross-purposes to long or even medium-term solvency. That 5% cash to cover what's out will now drop to... near-zero? Or will banks bulk up on reserves so actually increase?
The problem is the Fed has one tool - liquidity. We've got something structural here. Lots of us have been harping about the structural problems for a long time and the Fed can even agree - it doesn't change the fact that the only solution they have is pouring money on it.