Avoiding the seigniorage tax

Excess reserves are climbing to match treasuries held.  The banking system is seriously avoiding the siegniorage tax.  The result is a roll up of the lending network and the Fed will not know how o put it back together.

Do I have cause and effect in the right order? It matters not, the effect is the same, regulated banking is gone. Does it matter if tax avoidance is the key? No, tax avoidance may be a proxy, but it is reliable. We can see that in the preceding trend, the two managed to stay very close.