Friday, November 30, 2012

Bank Reserves at Federal Reserve

Over the last several years, many analysts have argued that QE isn't inflationary because the money that the Fed has printed has been locked up in reserve balances.  I don't personally share this view, but it's worth noting that recently reserve balances have been contracting and currency in circulation has been growing as banks have chosen to convert reserves to currency.  Currency in circulation is now growing at nearly a 10% annual rate.

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