3 ms·
"This money printing adds to the money supply. This excess money can ultimately lead to high inflation with excess money chasing the same amount of goods and se
by aliston 13y ago
"This money printing adds to the money supply. This excess money can ultimately lead to high inflation with excess money chasing the same amount of goods and services."
I'm in the process of writing a blog post on this. For now, the printing hasn't led to an increase in the money supply. Banks are holding record amounts in reserves and aren't lending the way that they were in 2008, so the money supply hasn't increased.
- jpmattia 13y ago> so the money supply hasn't increased. The money supply has indeed increased: http://research.stlouisfed.org/fred2/series/M2/ http://research.stlouisfed.org/fred2/series/M2/ Perhaps you are thinking about monetary velocity, which is decreasing: http://research.stlouisfed.org/fred2/series/M2V http://research.stlouisfed.org/fred2/series/M2V
- aliston 13y agoYes, I meant that it hasn't increased in the way that it "should" relative to the monetary base.
- mcnees287 13y agoMV=PQ Where, M=money supply V=times money changes hands in one-year P=price level Q=GDP The assumptions for this model are often missed, and include: 1.No excess reserves 2.No international leakages, ie.,no carry trade. These two assumptions are unlikely to be true in these times. Current excess reserves are nearly $1.9 Trillion Excess Reserves Source (FRED): http://research.stlouisfed.org/fred2/series/EXCRESNS http://research.stlouisfed.org/fred2/series/EXCRESNS
- fauigerzigerk 13y agoSo either the entire QE money has gone into reserves or banks are parking money at the Fed that they used to lend to each other until 2008. I wonder which one it is.