No more than 2.5% of all money in circulation is cash
There was some excellent commentary yesterday that I recommend.
They revealed that total amount of money in circulation in the USA IS $20 TRILLION
The total amount of physical money in circulation is 53 BILLION
I did the calculations and that represents 2.65% of all the money in circulation
More money has been created in the last 3 years than during the entire US history
Before Nixon got rid of the gold standard that figure would have been 100%
The comparative figure for New Zealand is $1.6 thousand million cash in circulation against $254,000 million. That means that cash in New Zealand represents 6.4% of all money in circulation.
From this it is easy to see why the banks don’t want people withdrawing cash, in general and in this situation in particular. The banks simply do not have enough to cover it.
Essentially, they have already created a cashless society.
In addition, under fractional reserve banking rules the banks traditionally needed to keep 10% of money in reserve to pay out to depositors.
The rest could be created out of thin air.
However this has changed in the covid era:
As of March 2020, the reserve requirement for all deposit institutions was set to 0% of eligible deposits. The Board previously set a zero reserve requirement for banks with eligible deposits up to $16 million, 3% for banks up to $122.3 million, and 10% thereafter. The removal of reserve requirements followed the Federal Reserve’s shift to an “ample-reserves” system, in which the Federal Reserve Banks pay member banks interest on excess reserves held by them….
Canada, the UK, New Zealand, Australia, Sweden and Hong Kong have no reserve requirements
https://en.wikipedia.org/wiki/Reserve_requirement
This is discussed here
One thought on “No more than 2.5% of all money in circulation is cash”
Canada sold all their pennies to China, melted down copper year’s ago.
Digital cents exist in Canada. But now we round off to the nickle 5cent, when using cash.
I always use cash. The bank doesn’t start giving decent interest until you have $20 000 or more in savings… Yielding an annual increase of $10-100. It’s not worth it, to keep cash in the bank.
I have metal savings. Yet, I cannot see gold, or even silver coins becoming accepted tender.
The economy collapsed in February 2020… We haven’t seen the knock-on effects yet.