my point is that banks are “earning” interest on reserves which are based upon (among other things) deposits.
I understand. Should have added the [/s] in my response for sarcasm.
Not necessarily. They are only earning interest on reserves if they are able to lend them out and turn a profit on the loans, which they are not at the momemt.
Moreover, the deposits COST the banks money because they have to pay a fee to the FDIC for every dollar on deposit.
So the banks are not making money on the deposits (no loans are being made due to ZERO DEMAND in the real economy) and they are having to shell out money on the deposits to feed the FDIC.