The One Sentence Everyone Needs to Read and Understand

Bruce Bartlett:

The Fed has talked openly about new procedures to soak up the bank reserves it has created even as those reserves remain largely idle and unlent.

You don’t get inflation if there is no money multiplier in play. So long as the banks are just holding the cash, worries about monetary policy leading to inflation are at best a shibboleth.

(via Brad DeLong)

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