The unprecedented and insane reserve overflow of the U.S.-based banks, with deposits completely decoupled from lending, is only getting worse as the Federal Reserve’s latest quantitative easing binge passes 18 months. The Fed’s most recent flow-of-funds report, for the week ended May 12, now shows the entire U.S. system of banks with a 10% surplus of deposits over all bank credit, and a 70% surplus of deposits over bank loans. The figures are $17.15 trillion in deposits, $15.55 trillion in bank credit, and $10.35 trillion in loans and leases.
What this indicates is, first, that the banks held $5 trillion in speculative securities assets of all kinds (part of “bank credit") despite claiming to be “commercial banks.” And these figures are dominated by the Wall Street “Big Six” banks which have two-thirds of all deposits and are now nearly 20% larger than the immense, far too big to fail, break-them-up-or-die size they boasted as of 2019.
Second: Add to that their $3.8 trillion in cash reserves and $2.2 trillion in “trading assets and reverse repos,” and you have huge banking conglomerates which are absolute engines of hyper-speculation and inflation. Pumping them ever more full of reserves, is the Federal Reserve—so careful and attentive now about their reducing exposure to fossil fuel-related investments, of course—whose balance sheet has reached $8 trillion and rising, from $3.75 trillion just 19 months ago at the start of “QE4.”
