I think, the reason, why those reserves are not needed, is because, the money, which the government spends, must show up onto regular bank accounts. When the government prints bonds rather than lending from the central bank, it just prints another form of state money, which makes reserves obsolete. And it also makes sense: banks don't need the central bank to create money, since they can do it themself. And since the money ends in their banks, they must create it anyway, because this is the only way to show up on private accounts.
I think thats Michael Hudson his point because the Treasury and central bank used to be one entity. In other words, the Treasury used to do what the central bank now does.
@@webfreakz I think, the central bank did replace the state mint. When the treasury creates bonds, it starts minting itself again and bypasses the central bank.
