> You wrote: "ultra high net worth persons who mostly hoard it"

I thought it was clear that the sentence after modified that.

Although you need to ask yourself, when those UHNWIs spend a billion dollars cash on stocks and bonds, where does that cash go? It doesn't just disappear into the ether, it becomes the seller's deposit, and now the seller is holding the cash. So yeah, at the end of the day (literally, payments settle at the end of the day), somebody is holding that cash, and that somebody is the ultra rich and banking institutions, trusts, and various other entities that they own, with public pension funds taking up some of the slack. It's much clearer if you stop think of it as "investing" and start think of it as what it is, an asset swap. Namely swapping cash for equity or debt.

> The banks cannot loan money out unless they have reserves on deposit. Yes I know about fractional reserve banking, but those reserves come from deposits. That's why banks give out free checking. They can loan a multiple out of the cash on deposit. It's also why they have minimum deposit levels.

Nope. Reserves come from the Federal Reserve, they're a different thing. That's right, the money in your deposit account and the money banks use for interbank payments are different "data types" that happen to share the same unit of account.

Banks can and do originate loans in any amount they deem fit when they have a creditworthy borrower. When Mr Banker is deciding whether or not to extend your business a 10 million dollar line of credit, he doesn't call Fred down in the Vault Department to check if there is enough in the money bin or reserve account to originate the loan. He simply sends it off to underwriting, sees if they think your business is creditworthy, and if so originates the loan, which creates a loan liability and a deposit asset on the business's ledger and a loan asset and deposit liability on the bank's ledger. Reserves are not at all involved in the loan origination process. Then before close of business the bank acquires any necessary reserves on the interbank market or from the discount window. And those reserves will always, in aggregate, be available, because the 0th law of the Federal Reserve is "thou shalt maintain the integrity of the interbank payment system."[1]

The fact that reserves have no direct effect on loan origination is precisely why banks are now required to meet capital requirements in addition to reserve "requirements."

> Take some time yourself :-)

I have. Like I said, you're objectively wrong about this. If you're ok with that state of affairs then fine, but since this site is about knowledge and I have great respect for you I thought I'd share.

> "No individuals or private sector entities are permitted to store gold in the vault." -- from your cite

That was mostly humorous. But yeah, money bins are for the elite. Sovereign wealth funds and such.

Incidentally this is true for reserves as well. Individuals are not permitted to open a reserve account at a Federal Reserve Bank. The only way we can actually obtain and hold reserves is via physical Federal Reserve Notes. Obviously that's got a lot of considerable drawbacks, although I'd bet dollars to donuts that the ultra wealthy probably keep somewhere between a hundred thousand and a million bucks in paper money reasonably close at hand for reasons analogous to why normal people have a change jar.