“I know that for every $100 of deposits a bank can lend $900 on a 10% reserve ratio system,” per
this phrasing seems confusing to me.
it would seem that it would be more correct to say that for every $100 of reserves in a bank the bank has lent out $900 of deposits… based on a 10% reserve system
or perhaps for every $100 of deposits in a bank , the bank has lent $900 based on a 10 percent reserve ratio…
i dont understand the omo and federal target mechanism well enough to know if they are inflationary in a negative sense or not.
but if a non market participant, the federal reserve, creates money in a way that permits a few poor money mangers keep getting (loans form thin air??) money to prop up a banking system…it would seem to me that it is a failed procedure.
as i understand this process…it seems that continually creating spending money from “promises to pay money” is like shooting oneself in the foot raising prices more than they would have otherwise raised.
does the process really help anyone except those who get closest to the federal reserve and its agents?