-1
$\begingroup$

If we look at the total in the federal reserves account Here at the moment is about 3 trillion and if the reserve requirement is 10% does that mean that there is at least 30 trillion out there in money supply?

I know that there can be excess reserves, but give the fact that the reserves have increased dramatically in shot period of time, we can assume that there was a shortage and not excess of supply meaning the 3T were needed to back up around 30T.

$\endgroup$
  • $\begingroup$ Why do you think they measure M2 etc. if MB was enough? Or are you asking about a deriving just some bounds from M2 from MB (since you say "at least")? You need clarify (at least) what you mean by "total money supply". $\endgroup$ – Fizz Apr 28 at 2:30
  • $\begingroup$ For a (simplified) explanation on the relationship between these see sjsu.edu/faculty/watkins/moneymultiplier.htm (and sjsu.edu/faculty/watkins/money.htm) $\endgroup$ – Fizz Apr 28 at 2:38
  • $\begingroup$ @Fizz I was thinking beyond m2, including m3 and m4 $\endgroup$ – user3181821 Apr 28 at 11:39
1
$\begingroup$

These are the money supply statistics from the Federal Reserve.

You cannot infer wider money numbers from the monetary base, since there are excess reserves. Those excess reserves were not created to “back up” deposits, it was a deliberate action to expand the monetary base.

| improve this answer | |
$\endgroup$

Not the answer you're looking for? Browse other questions tagged or ask your own question.