Excess Reserves

January 20, 2021 .In the wake of the economic meltdown caused by the government’s dramatic measures to halt the spread of the corona virus the Fed  leaped into action.  It boosted its balance sheet by about $3.0 trillion in March and April primarily via...

Fed Funds Rate

January 15, 2021 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,...

M-2

January 13, 2021 When banks lend to consumers and businesses, they put the proceeds into a checking account.  At that point the money supply begins to grow. In November M-2 grew at a 217.5% annual rate.  In the past year it has grown by a record-shattering 25.1%. That...