$1.46 Trillion in circulation, but commercial banks have $11 trillion total deposits?

So, I was doing some research. Hopefully I'm not wrong or confused here. Someone correct me if I am wrong!

1 trillion is 1000 billions.
Here in this website, you can see a chart that shows how much total money is deposited onto commercial banks, in billions.
fred.stlouisfed.org...

The total is basically 11,000 billions (11 trillion).
That's $11 trillion!

BUT, if you look at the federal reserve website and look at how much money/USD is in circulation as of June 1 2016, it's $1.46 trillion. www.federalreserve.gov...

How can commercial banks have $11 trillion in total, if there's only $1.46 trillion USD in circulation?

If this isn't solid evidence of the USD being made out of thin air, then idk what else is!

Hope there's no bank runs any time soon !!!

I think you would have a more coherent point if there were 11 trillion in circulation backed by 1.46 trillion in withholdings but hey, economics was never my strongest subject either...

a reply to: Kuroodo

$1.46 Trillion in circulation, but commercial banks have $11 trillion total deposits?

And you wounder why some call for higher taxes on the rich or other means to get that cash back into the flow.

originally posted by: Kuroodo
If this isn't solid evidence of the USD being made out of thin air, then idk what else is!

There are different measurements of the money supply. The smallest is the M0 supply which is basically cash and coins. Then there's M1 which I don't remember off hand, but is the M0 supply + more. M2 which includes M1 plus more. The M2 is where short term bank deposits begin to be counted.

As you can see here
www.tradingeconomics.com...

There is 12 trillion in the M2 supply. The $11 trillion the banks have is part of that, but the bank measurement includes both short and long term deposits while the M2 only includes short term.

Last is the M3 which includes everything. Due to the difficulty in calculating it, the M3 hasn't been determined for several years now, and likely won't be determined again in the future.

a reply to: Kuroodo

Does the "In Circulation" mean just cash while the Deposits equal all money???

They make that information confusing on purpose IMO. I've tried to look up info like this before and nobody gives you a straight answer it seems, or they all have conflicting info.

This is actually a good thing.

It means that banks are well supported by cash reserves, they aren't over leveraged, and people might actually be saving.

This is what you want to look at.

www.tradingeconomics.com...

In economics, the money supply or money stock, is the total amount of monetary assets available in an economy at a specific time.[1] There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits (depositors' easily accessed assets on the books of financial institutions).[2][3]

en.wikipedia.org...

Bank 'deposits' are rather meaningless by itself.

Hmm, it's more complex than I thought!
Thanks for the input. I'll surely look into all this to understand it better!

a reply to: Kuroodo

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Henry Ford

Fractional reserve banking coupled with QE (the monthly buy back of treasuries and mortgage backed securities totaling over a trillion dollars a year since its inception..) and the tightening of loans.

And that's only a smidgen of the problem(s).

a reply to: EternalShadow

Plus one, here- fractional reserve banking is the key word to research. Understand that, and you'll see how broken this system really is.
Once you've got your head wrapped around that, quantitative easing is the next thing to look up.

The first concept will prove to you that the system cannot run forever, and will eventually fail.
The second will show you how far along it is.

a reply to: neo96

They can be. But if deposit accounts continue to grow steadily then it can be said that savings is actually taking place. This is a good thing because Americans generally don't ave their money. Capital savings is incredibly important especially during down times because you need that restrained capital to reflate the economy.

originally posted by: lordcomac
a reply to: EternalShadow

Plus one, here- fractional reserve banking is the key word to research. Understand that, and you'll see how broken this system really is.
Once you've got your head wrapped around that, quantitative easing is the next thing to look up.

The first concept will prove to you that the system cannot run forever, and will eventually fail.
The second will show you how far along it is.

We have had various forms of fractional reserve banking for longer than we have had originations we would recognise as banks. What about it makes you think the system is broken?

Unfortunately there are many things that do not add up in the economy. It does appear somewhat dangerous for those that have tried to provide clarity to the full economic picture. The part of the pentagon that got hit on 9/11 is just one of many examples.

How people attribute different values to different assets also creates problems in defining concepts like total wealth.

a reply to: ScepticScot

Because when the loans are paid back, because of the fact that the money is created at the same time the loan is created the money and the loan cancel out themselves, leaving nothing more than interest. So there is interest to be paid, but no money in existence to pay it. That's how it is generally.

It's explained more in detail in this video (also in the "money as debt" videos):

a reply to: Kuroodo

All of the money the federal reserve has created out of nothing stays at the big banks because there's no incentive to put that money into the economy. Basically QE was done to save the banks alone, and to prop up the illusion of a high DOW Jones index.

originally posted by: TheBandit795
a reply to: ScepticScot

Because when the loans are paid back, because of the fact that the money is created at the same time the loan is created the money and the loan cancel out themselves, leaving nothing more than interest. So there is interest to be paid, but no money in existence to pay it. That's how it is generally.

It's explained more in detail in this video (also in the "money as debt" videos):

On phone and no WiFi to watch video so sorryif I am not answering what I assume to be the point .

What do you think happens to the interest when it is paid? The money dosent vanish it is redistributed.
There is no great accumulation of unpayable debt resulting from interest.

a reply to: ScepticScot

It vanishes because money in our system is debt.

originally posted by: TheBandit795
a reply to: ScepticScot

It vanishes because money in our system is debt.

All money is a debt(or perhaps more exactly an IOU) in order for it to work as money.

Doesn't have anything to with it vanishing.