425. MM Who's got your Money?
Once upon a time if a person wanted to they could take their money and put it in a Bank’s big ole safe. It was your money, you could come get it whenever. Then Bankers began a program of paying you a modest interest if they could use some of your money. They would take your money and use it for mortgage loans, and make more money from it. Of course they were careful, never borrowing more than say 25% of your money. Money that you put into a bank is no longer legally yours. Stop thinking that way. Every dollar you give them is immediately borrowed and goes into a pool fund that banks loan to other customers, mortages, business loans, purchase of securities, and to pay the banks payroll.Money deposited in a bank is no longer your money, the law says you loaned it to them, and legally, your deposits are simply another IOU to them, same as if they borrow from Federal Reserve.By 2019, Banks were allowed to borrow up to 90% of your money. In 2020, banks were allowed to take 100 %. Meaning they were required to hold 0% of your money that you deposited.July 2023, your bank sent you a letter. You probably threw it away with the credit card offers and grocery store coupons. That letter announced the most significant change to American banking in 50 years. On July 20th, 2023, the Federal Reserve launched something called Fed Now Service. This wasn't just another payment app or mobile banking feature.Fed now replaced the automated clearing house system that our country had used for over 50 years to move money between banks.
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