Re: Latest Rant from Warren Mosler

From: William F Hummel (wfhummel_at_comcast.net)
Date: 12/17/04 

Date: Thu, 16 Dec 2004 19:17:11 -0800

On Thu, 16 Dec 2004 18:59:14 -0600, "smithaa02" <asdf@asdf.net> wrote:
>
>William F Hummel <wfhummel@comcast.net> wrote in message
>news:aeu1s09jkaek9iti0jojvdg7h70jrqhojn@4ax.com...
>> OK, give me an example of a tax payment by check that does not cause
>> the payer's bank to lose reserves (government liabilities).
>
>A deposits at monopoly bank Z. A pays taxes to government. Government
>turns around and deposits the tax money in monopoly bank Z because of
>Treasury Tax and Loan. Bank Z's reserves stay the same as would there other
>bank liabilities and credit. Where were you going with this?
>
>From the FRBNY website: "Individual income tax payments do not go
directly to collector option depositories. Rather, these tax payments
go from individuals to the Internal Revenue Service, which forwards
the payments to about 160 "lockbox" commercial banks nationwide. The
lockbox banks process the checks and forward the payments to the
Federal Reserve Bank of New York. If the Treasury does not need the
funds immediately, they are transferred to the TT&L program and
placed, when possible, in note option depositories."

There are now 11758 depository institutions participating in the TT&L
program. What are the chances that any given check will be credited
back to the depository it was written on? Virtually nil.

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