FYI, Back in October 2008, just as the last financial crisis was starting, Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve would start paying interest on the reserves that banks keep at the Fed. This caused an absolute explosion in the size of these reserves. Back in 2008, U.S. banks had less than 2 billion dollars of excess reserves parked at the Fed. Today, they have more than 1.8 trillion. In less than five years, the pile of excess reserves has gottennearly 1,000 times larger. This is utter insanity, and it will have very serious consequences down the road. This explains why all of the crazy money printing that the Fed has been doing has not caused tremendous inflation yet. Most of the money has not even gotten into the economy. The Fed has been paying banks not to lend it out. But now that big pile of money is sitting out there, and at some point it is going to come pouring in to the U.S. economy. When that happens, we could very well see an absolutely massive tsunami of inflation.The longer that the Federal Reserve continues to engage in quantitative easing and continues to pay banks not to lend that money out to the rest of us, the larger that inflationary time bomb is going to become. So where do we go from here?
Posted on: Wed, 03 Jul 2013 02:53:22 +0000
Trending Topics
Recently Viewed Topics
© 2015