SubscribePrinting Press fired up and churning out cash
On the contrary, according to the Federal Reserve Bank of St. Louis, the monetary base (the raw material for the money supply) has risen at a seasonally adjusted annual rate of 86% over the past year. Bad enough, but over the past three months this has skyrocketed to an annual rate of almost 1,000%!
Adjusted reserves have ballooned from $100 billion to $700 billion since mid-September, while the Fed’s balance sheet has more than doubled over this period of time, from about $900 billion to a thumping $2.2 trillion.
These funds are beginning to show up in the Fed’s two measures of the money supply. M2 has risen 8% over the past year, while MZM, the St. Louis Fed’s measure of liquid money, is up more than 10% during the same period.
This is with the banks still reluctant to lend. Once they loosen their purse strings, the money supply will soar.
My comment: When the inflation begins manifesting itself next year in higher prices it will be interesting to see what the FED will do. Will they raise interest rates or withdraw the excess liquidity? Will the economy collapse again if they pull in that liquidity? What bubble will develop because of all this money.
John Polomny
The Real Deal
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