In a testimony dated on February the 10th of 2010, on a website of the Federal Reserve, it was clearly black on white that Ben Bernake was proposing that banks would be allowed to have no reserves at all on their books.

Quote:
“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system”.

Besides of all the trouble which occurred in the banking system we have seen last years, this could be the climax to complete the whole story. If there is something that could restrain the money makers and prevent them from doing which led to the crisis, it would be the reserve requirements that determines how much money banks may create. Now Ben Bernanke comes with the statement that bank do no longer need to maintain a reserve.

If banks, for whatever reason, in the near future will collapse, the US government need to bring even more money to bail them out. The taxpayer would be happy with that. And if the tax money is not sufficient, the US Government will snip with their fingers, and the FED will immediately turn on the printer to print some more money.

This is not the way how to solve problems. The conclusion is that you cannot spend your way out of problems, and we don’t have to make it easier for banks to print yet more money. We’ve seen it in the past that the exclusion of regulation will led to heavy problems. If they then also exclude the little remaining systematic regulation, than it wouldn’t be hard to predict the future. We are going to see exploding banks and ultimately exploding governments. The biggest banks are already nationalized, so the bill will be automatically paid by de Government: the taxpayer. We are ultimately heading tax raises and tax revolts.