Reserve Ratio at All Time High

posted by Nima

December 14, 2008 · Posted in Monetary Economics 

The Federal Reserve’s true reserve ratio, the ratio between the monetary base and bank deposits that are subject to reserve requirements reached an all time high in October at 59%:

This is due to the aforementioned explosion in the monetary base that has not yet fully been reflected in the true money supply.

In order for  the reserve ratio to go back to more normal levels, the true money supply would either need to rise to approximately $6.3 trillion from currently $2.07 trillion within the next few weeks, or the reserve balances would need to drop back down to normal levels.

My money is on the former alternative. This will of course result in hyperinflation. Gold and silver will then soar to unprecedented heights.

Either way, something big is going to happen shortly. The Federal Reserve Bank is approaching judgment day.

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