M-2

April 18, 2019 Growth in the M-2 measure of the money supply  has been steadily slowing and is now growing at a 3.8% pace. To know whether that rate is too fast or two slow, the Fed needs to look at the relationship between growth in the money supply and growth in...

Excess Reserves

April 1, 2019 Banks must maintain a certain percentage of their deposits in an account at the Fed known as that bank’s “reserve” account.  Because they do not want to overdraw their account, prudent bankers always seek to hold just a little bit...

Fed Funds Rate

March 29, 2019 The federal funds rate is the overnight rate that banks charge each other to borrow/lend  reserves.  Some banks have more reserves than they need.  Others (principally large banks) are short of reserves and must borrow from other banks in the system,...