Does fractional reserves cause cycles?

What is a reserve ratio?  Investopedia says:

The reserve ratio is the portion of reservable liabilities that depository institutions must hold onto, rather than lend out or invest. This is a requirement determined by the country's central bank, which in the United States is the Federal Reserve.

So if we hold onto 100% then we are not lending anything?

In my world the currency issuer is a spreadsheet function, unable to recognize property rights.   Who backs the loans? Depositors, the spreadsheet function backs the matching error only, market uncertainty due to serialization of trades in the ledger system.

Do depositors back loans 100%  normally? No, mostly 85 to 95%, they deposit money for the specific purpose of taking risk, as do the borrowers.  They are betting, who gets real or inflated prices.  Money is equity, this is a money market, let the equity trades happen.

Is this really how it works today in the central bank world? Depositor function is greatly complicated by insurance, implicit and explicit government backing, term loans and restricted entry and exit clouding prices.  If we went through all the regulations and price fixings, sort them out, we would find the depositors mostly back loans, sooner or later.  It is the later that causes cycles.

Cycles happen, in this economy,  because government assumes term risk and gets bailed out as a result, it is as simple as that.  The way to remove cycles is use adjustable, asynchronous interest charges for the currency issuer.  When indicated,, the currency issuer set current interest charges immediately  such that depositors more better match borrowers than they did before.  The currency issuer is the first to deliver the monetary innovation. Currency issuer needs support for cash in advance for prequalled accounts. In other words, it is a margin account system.  The term structure is a separate construction by insurance functions outside of no arb cash laye.  Yes, insurance companies can cause cycles.  Seignoriage is the other big problem.

The pure cash layer generates a uniform random matching error, there are no noticeable cycles at that layer.  We still get defaults and mis-pricings and snooker by tech titans and so forth.  But at the cash layer, we just get honest, on the scene reporting of the aggregate money accounts, always to within some known, bound error.

Amazon patents the cage

The original patent documents depict a cage designed to carry employees around warehouses. The idea is that as warehouses become crowded with robots whizzing around carrying out tasks, it may be safer for humans to navigate these workspaces in an enclosed box.

Someone made a movie about slaveholders carrying slaves in cages, in 1960 I think.  Jeff can go find those people and take their inheritance for not realizing they were using a future patent.

But the idea goes back to Roman times, I hear.  So, Italy can just send Jeff a check for ten billion to cover it the ancient use of slave cages.

I claim the patent for people drinking from a cup while walking around warehouses. "Methods and apparatus for delivering nutritional liquids in a warehouse environment". So, all you Amazon employees, just send me a check now, why make the patent office go the the hassle of guaranteeing that my patent is not common knowledge.

Google execs are racist pigs

 “An email chain among senior Google executives from the day after the 2016 presidential election reveals the company tried to influence the 2016 United States presidential election on behalf of one candidate, Democrat Hillary Rodham Clinton. . . . The four page email begins with Murillo claiming she and others at Google were engaged in non-partisan activities not designed to help any one candidate or another—only to undercut her own commentary in later passages in the emails by openly admitting the entire effort to boost Latino turnout using Google products with official company resources was to elect Clinton over Trump. The critical miscalculation, Murillo wrote in a stunning admission in the email, was that Latino voters backed Trump by higher margins than any experts had forecast in the lead-up to the election. Trump’s 29 percent among Hispanics nationally blew prognosticators away, and he hit even higher numbers—about 31 percent—in the key battleground state of Florida, Murillo admitted.”

Google execs bought into the concept that Hispanics are little brown passive entitlement slaves needing help from their great white leader.   This is the standard antebellum dem party, great white leaders are self-identified as morally superior.  The Democrat party has not changed.

Not quite George

George is discussing the TNB suit against the fed for refusing a master account and says:

No, sir: it's because the Fed can fob-off risk — like the duration risk it assumed by investing in so many longer-term securities — on third parties, meaning taxpayers, who bear it in the form of reduced Fed remittances to the Treasury. That means in turn that any gain the MMMFs would realize by having a bank that's basically nothing but a shell operation designed to let them bank with the Fed would really amount to an implicit taxpayer subsidy. 

Not quite.  

If the door to master accounts was open there would be more demand than loan income , causing the Fed to charge congestion fees. Congestion fees  stabilize the demand queue.    With coingestion fees subtracting from interest payments, the Fed  loan to deposit ratio returns to where it was.  The difference is that any qualified party has competitive access to master accounts, which is the goal.

The remittances are a separate issue.  Best to treat them as a bond tax that is shared between Treasury and the member banks.  When the Fed raises the IOER it reduces the implied bond tax as remittances are reduced.  

Congestion fees would be unnecessary in a truly open S&L currency issuer, a profitless statistical matching machine, for example.  In the profitless, automated currency issuer, there are no remittances and the gap between loans and deposits can vary, the corridor effect.   Even when the currency issues declares a fixed growth in the money supply, congestion fees should not be needed, nor remittances, as the issuance function should be hedged by participants..  

I am scaredy pooh

Bob Woodward On Donald Trump: ‘People Better Wake Up To What’s Going On’

Latest on ruskie collusion

The greek guy has verified that the April meeting was e mail.  The secret prof counterparty denies he said e mail. But secret prof and fake Putin niece have disappeared, likely to Ruskieland. They are likely liars.  Then about two weeks before their release, suddenly everyone knew Ruskie had e mails because Snowden began leaking.  No one knew which e mails.

So, Ruskie dunnit it, evidently, or got them from third party.

Darn

Feds back away from ‘Red Sparrow’ sex claims in Maria Butina case

It was already in my script. 

Eric Garcetti gets an A on housing innovation

His first completion, at 50k per housed.  Slightly high but a first try.  

Kind of the direct, local libertarian anarchist approach, just go straight for the solution regardless of origination. Break the code rules, make the shelters easy to police. No need for massive programs, just learn to do it, nook by cranny as needed. More garage conversions for the home owner, legalize tiny house.  

Re-introduce work camp for the lost kids, have them do forestry work, cutting fuel out of our forests.  Haul it off and experiment with biofuels.  Upgrade the tent concept for efficient camptowns.  Especially in California.  Works for New York, we have to cool, they have to heat; but otherwise, the tiny home concept is better than  hallways, and services can locate these people easier, they become legal, have mailing addresses and ID.

I am almost legal

One last mailing to the Bascom Street Bandits, the local IRS facility.  Part of the pension stampede.

Inelastic labor market

Chart from Zero Hedge

31 days is a long time to get a hire and would kill small businesses.  Wage space is wasted, not enough wage slots to shorten the search time.  

Huge weight on labor because of the myriad of government fees and fixings. So the typical firm can find few wage slots, not already hammered by marginal guv costs.

If I believed that a labor market could be isolated, I would say the market is contracted, dropped rank two years ago.

The key secular trend is boomers retiring, of course.  It adds to the government burden on wages and shortens supply.

The contracted labor system will soon reduce demand..