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The FED’s Dilemma, Nashville Style

Written by Gary North on August 12, 2013

Country music legend Merle Hazard lays out the prospects. How excessive are those reserves?

The St. Louis Federal Reserve Bank is sufficiently worried about this quandary that it has discontinued publishing the FRED chart on excess reserves. I can hardly blame them. Here is their operating presupposition: “Out of sight, out of mind.”

ExcessReservesFRED

http://bit.ly/FRED-dead

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5 thoughts on “The FED’s Dilemma, Nashville Style

  1. Quibbling Author says:

    This is Merle Hazzard (pun on moral hazard), not Merle Haggard…

  2. 1baronrichsnot1 says:

    regardless of who it is, the chart is real. closing in on 2000 billion in reserves, we need another 3000 billion for obamacare, already owe on the books 17000 billion, and another 89000 billion off the books, who are they fooling, they will introduce another currency! We can't live under this debt bubble, the world will treat us as we deserve, a third world nation…

  3. How does the Fed fund bank withdrawals from this excess reserve? Does it sell assets like its massive bond holdings? Does it create more liabilities and "print" more currency? What is the Fed's plan to fund this withdrawal?

  4. What in the heck are you talking about?

    "regardless of who it is, the chart is real. closing in on 2000 billion in reserves, we need another 3000 billion for obamacare, already owe on the books 17000 billion, and another 89000 billion off the books"

    This video is about EXCESS RESERVES. That is the amount held in reserve that is in excess of the required amount. That has nothing to do with your claimed debt figures. We still had the same debt problem with effectively no excess reserves.

    The point is: they either unwind QE and let bond prices plummet, or not and let inflation kick off, effectively monetizing debt.

  5. The Fed exchanged new currency for treasury bonds and mortgage backed securities. They credit bank's reserve balances in doing so. They need to (and say they will) sell their newly acquired (via QE) securities to destroy the newly created currency that originally bought them.

    read this, and then read it again. http://research.stlouisfed.org/publications/es/ar