What Are Reserves? Monetary Poltergeists of a Rotting Gangrenous Banking System | Rafi Farber

I see dead people walking around like regular people. They don’t know they’re dead. How often do you see them? All the time. They’re everywhere. But anyway, I wanted to show you this chart. This is an old discontinued chart that begins in 1984. That was a great year. Georgia will love that year. Hey guys, Rafi here from The Endgame Investor and today I’m going to talk about two things. The first is the ghosts, the haunting, the poltergeists of dead monetary bodies. Does that sound scary enough? Dead monetary ghosts, poltergeists that haunt the monetary system to this day, which are bank reserves.

And I’ll explain exactly how bank reserves are the ghosts of dead debt. The power of Christ compels you! Guess what? It’s not that compelling. Well, let’s talk about monetary poltergeists. Remember in 2008 when everything was crashing and the entire global economy was about to burn to the ground? Well, what did the federal reserve do then? What they did was they took all the bad debts that couldn’t be paid. Remember, debt is the derivative of deposits, which are a derivative of the dollar, which is a derivative of gold and silver. And so what you do when the fiat system is seemingly operational is somebody takes out a loan and says to the bank, I will pay you back this loan with dollars.

And the bank says, well, here are the dollars. I will keep 10% of it on reserve and you will pay me back the other 90% with interest as you gain income. Then what happens is that the bank has the 100% reserves plus the interest on its balance sheet as part of the monetary supply. As part of the money supply, they are pretending the debt that they are owed is part of the money supply. The money supply expands. People get the signals that the money is available and they take out more loans than the economy seems to grow.

And then what happens eventually is that the debt cannot be paid back. And so the assets that were on the liability side of that loan that the bank took out for that business or that consumer or whatever it was gets erased. The money supply shrinks and interest rates start to rise because of the shrinking of money supply and you have a business cycle bust as the Austrian school business cycle theory states. And so in order to stop that in 2008, the Fed said, you know what, all those bad debts where banks cannot collect on them and they’re going to be erased from the money supply and cause a catastrophic failure of the entire global economy, which is based on the dollar as the main derivative of gold and silver and every other currency on top of it, including the entire planet.

We’re going to take all these bad debts. We’re going to put them on our balance sheet and we’re going to give the banks that have these bad debts, something called reserves, which are basically dollars in banks own bank accounts at the federal reserve. So in other words, these bank reserves are the ghosts of dead debts past that now exist as phantom, phantom, phantom money. I say that because gold is real money. The dollar is phantom money. Debt is phantom upon phantom money and reserves are phantom upon phantom upon phantom money, meaning they are derivatives of debt, which are derivatives of dollars, which are derivatives of gold and silver.

So let’s go to the charts. I’ll show you graphically what has been going on here and what bankers really are and what it means when they go down to a critical level, which should destroy the current fakeness of fakeness of fakeness on top of the Fiat monetary system and lead to the end game, which has been a long time coming. And for we knew this video is brought to you by miles Franklin precious metals investments. Today’s current specials, this week’s current specials, as you can see on the screen, are silver junk half dollars.

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There’s a lot you can do with your gold and silver once you have it. You can earn interest in it or you can decide not to and bury it in your backyard or somewhere else or you can do both and hedge your bets. But anyway, I wanted to show you this chart. This is an old discontinued chart that begins in 1984. That was a great year. Georgia will love that year. 1984. 1984. These are excess reserves of depository institutions. These are the amount of excess reserves that existed from 1984 to August 2020.

They were known as excess reserves until 2020 when the fed changed no nuclear and just called them reserves because there was so much extra dollars that they didn’t know what to call them anymore. It was getting embarrassing. So they just discontinued this entire chart and called everything reserves. Now, there wasn’t zero. There weren’t zero reserves until 2008. If we zoom in on this chart, we can see here that yeah, they were a little bit below one billion dollars every month. And then all of a sudden we have here 2001 September 2001.

I think you know what happened then. Let’s not speak of it. They rose to about 20 billion, 19 billion dollars here. And then all of a sudden you see here 2008. Wham! They go to whatever that number is. That number happens to be 796 billion dollars. What happened here? Well, all the debt that was coming, crashing, all the short term and long term debt that was crashing in 2008, this was really the end of the fiat monetary system as we knew it because all the debt that was piling up could not be paid and it was creating a massive domino that was building up since 1933.

And then everything fell over and then all that dead debt instead of being erased from existence became transferred into something called bank reserves, which is the ghost of that monetary debt. The Fed said, well, that debt can’t be paid. Give us that debt. We’ll pay face value for all that debt and we’ll take it on our balance sheet and we’ll give you banks something called reserves, which are dollars that you can use for whatever you want in the future. So you never lose anything. We’ll take all the losses, which means the dollar itself will take all the losses, which means all the consumers that depend on dollars, which is basically the entire planet will take all the losses through inflation, through rising consumer prices and losing their minds and not being able to save for the future and not having any reason to build, save and invest.

This is the reserves level that includes excess reserves plus required reserves. There’s no more excess reserves because it’s all just regular reserves now. These numbers come out every week and I think the critical level right now is about $3 trillion, which is what spurred the regional banking crisis. Now, the question is who owns these reserves? Why can’t they be put back in the money supply and why do things go haywire if they go below a certain level? We saw here that they went below $1.5 trillion in September 2019, which was the Repocalypse when interest rates went up to about 10% overnight.

Why $1.4 trillion because that was the level I think of before QE3 in 2012, 1.434 was the low year in October 2012 and we hit that low here in September 2019 when the Repocalypse hit and we hit another one over here with the regional banking crisis. So I think the critical level is over here and I’m going to show you two more charts. One is rising repo volume. A repo is an overnight loan from one bank to another. One bank that is cash poor is borrowing cash. These are bank reserves from a reserves rich bank to either fund something or just to meet the regulatory requirements and I’ll show you this volume right now.

As you can see here, the volume of repo loans, this doesn’t take into account the interest rate on each repo loan that’s being made from bank to bank overnight, but they’ve been going steadily higher and higher and higher and higher. This could be because of banks becoming very tight on cash and them needing about $2 trillion a night to meet regulatory requirements. The question is why is this happening and why do banks need reserves at all? And so this is what I think is going on here. In 2008, the big banks that were about to fail got majorly bailed out as we saw with the regional banking crisis where bonds were taken at face value even though they were not worth the face value and the federal reserve took on the losses.

It’s always the same thing with these bailouts. We have a small group of very, very big banks that have a lot of these reserves of this dead debt that has existed since 2008 and we have a lot of other banks that are very poor in reserves and do not have a lot of excess reserves so they need to borrow from the big banks while this dead debt, this ghost of debt that has existed since 2008 and keeps getting rolled over. You say, how does it still exist? Because it keeps getting rolled over into new debt and this new debt can’t be paid back so it stays as reserves on the big balance sheets.

This just stays dead and so what I believe is happening is that most banks that are not the very, very big banks are very poor in cash which is forcing them to borrow reserves, the excess reserves of the big banks, at high interest rates at currently about 5.3% and if they cannot borrow these reserves then they cannot meet their regulatory requirements and they go bankrupt. Meanwhile, the big banks earn the interest on these overnight loans and they get richer and richer and richer. Why do these reserves exist? Why don’t they just loan back into the economy? Well, the answer is because the Fed pays them higher interest than they would in loaning out this money into the economy, they pay 5.3 to 5.3%.

Whatever the administrative rate happens to be, the big banks like Bank of America, JP Morgan, those kinds of banks that earn this interest on their excess reserves, they earn more interest than they could loaning the money out into the economy because if the Fed stopped paying that interest to those big banks, all these excess reserves which were called excess reserves until 2020 which we’re now just called reserves because they don’t want to say the word excess anymore because it makes them look fat. You wrinkled as a prune. You fat as the queen of sea cows.

I love you. We don’t want to fat shame the Federal Reserve, do we? If they didn’t pay the interest on these excess reserves or on these reserves then all this money would come flooding into the economy at the same time. Imagine that the Fed cut the interest earned on reserves to zero, then all of this money would have to be loaned out at any interest rate above zero which would cause hyperinflation in about five minutes and so as the small banks that have no excess reserves need more and more cash as they expand their regular balance sheets.

If the big banks run out of excess reserves to loan to the small banks that need excess reserves to close their books for the night then you’re going to have a banking crisis which happened twice before. It happened in 2019. It happened in 2023. It’s going to happen again and the Fed is going to have to print again and that next printing round I believe will be the end game. Could I be wrong? Yeah. I believe that magic number is three trillion dollars in the ghost of dead debts past. Just give me a check Sam okay? Sam? See if I’m right.

Let me cross that threshold. In the meantime this is Raf at The End Game Investor. If you enjoyed this video then sign up to be an end game investor yourself. On Substack link in the description below where I discuss this in a written form which I’m better at than talking to a camera which I’m looking at the name of it now it’s called an hockey that feels weird. Maybe it’s like short for awkward. Anyway you can get your goal with Miles Franklin. You can store it with monetary metals for interest or you can store it somewhere in a hole in the ground with a dirty man safe and you can do all three.

Check the links in the description below. You can also become my Patreon Patreon for as little as three dollars a month where I discuss religious reflections on the monetary system and money and debt and all that other stuff. This week we are dealing with why fractional reserve banking is illegal under Jewish law. So check out Patreon for that video. This is Raf at The End Game. [tr:trw].

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