All Questions
Tagged with money-supply federal-reserve
41 questions
3
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2
answers
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Why didn't M1 grow much during 1970s inflation?
One of the most widely cited reasons for the '70s stagflation was expansionary monetary policy employed by the central bank.
Below is M1 during this time period (source), and it does not look like ...
- 70
1
vote
2
answers
564
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Is it possible for the stock market to beat inflation forever?
Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance.
I ...
1
vote
2
answers
451
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Loans create deposits, banks "are not reserve constrained"?
It is often said that banks are not "reserve constrained" when it comes to lending, and that loans create deposits (and therefore commercial banks create money). I have some doubts about the ...
- 65
1
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0
answers
24
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Is it accurate to say reverse repo is 'conflicting' with monetary policy?
As seen in the chart, historically, reverse repo levels have been fairly small or at most, a few hundred billion dollars:
Now into the USD trillion handle, it's a more prominent fixture of the money ...
- 1,101
0
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1
answer
262
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Can the federal reserve just "add zeros" to a bank's balance?
In The G word season 1, episode 3 the show mentions that when the government wants to stimulate the economy, it issues debt and takes that borrowed money to spend on whatever (bailouts, unemployment, ...
- 103
2
votes
1
answer
108
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How much money is owed to the Fed?
The Fed maintains its target interest rates by "lending" money to commercial banks:
When the actual federal funds rate is higher than the target, the Federal Reserve Bank of New York will ...
- 584
3
votes
4
answers
929
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Who controls money supply if the fed does not?
This whitepaper states (bold mine):
According to the consensus view, the two leading culprits of inflation
risk today are the fiscal deficit and the money supply. To illustrate,
take this CNBC ...
- 133
3
votes
2
answers
261
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Can the Federal Reserve permanently decrease money supply?
As far as I understand it, the primary way the Federal Reserve decreases the money supply is by selling bonds–the entities buying these bonds give up their cash for them and thus M0 is decreased. ...
- 163
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0
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49
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How the Fed and Treasury coordinate on liquidity management
On top of the Fed's USD120bn monthly treasury/MBS purchases, the drawdown in Treasury issuance over the last year has also added over USD1tr to the system. The premise is, faced with drawn-out debt ...
- 1,101
0
votes
1
answer
27
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At what frequency does monetary inflation compound?
The M1 money supply of the U.S. dollar is released monthly. But how often does the Federal Reserve or treasury add/remove a new dollar or a new penny? By second, minute, daily?
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2
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1
answer
6k
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Has there really been a 170% increase in M1 money supply in the US in February 2021?
tradingeconomics shows an M1 money supply of the past year as follows:
This suggests an unusually high increase of ~170% in February 2021.
Is this increase real or somehow an artifact of the way the ...
- 133
5
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3
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Is it true that the Federal Reserve is not federal and has no reserves?
The Money Masters is a 1996 documentary film that discusses the concepts of money, debt, taxes, and describes their development from biblical times onward.
Its main points were summarized by a ...
- 584
2
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3
answers
280
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How the Federal Reserve Manages Money Supply
I'm trying to understand how the Federal Reserve manages the money supply via open market operations. According to this post, when Fed buys securities, that increases bank reserves, which allows banks ...
- 131
4
votes
1
answer
109
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Do open market operations permanently increase the money supply?
Suppose the Fed buys 1000 dollars worth of T-Bills in the open market to try decrease interest rates and increase the money supply. It does this by printing money and electronically increasing the ...
- 171
1
vote
2
answers
96
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How does the Fed's stimulus push stocks markets higher?
I read that the Fed’s stimulus last March has contributed to a spectacular rally in stock markets. And indeed S&P500 has increased a lot since March.
But how does the mechanism work? How does the ...
- 11
0
votes
1
answer
143
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What does the Fed do with their profits?
As far as I understand the system the Fed prints money which it then uses to buy bonds. Bonds are basically statements of debt meaning that the Fed receives interest from the parties it has bought the ...
- 113
2
votes
1
answer
47
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Does the government ever pay back its debt from the OMO to the Fed? [closed]
I'm getting confused about how exactly does money being created by the Fed.
From investopidia.com:
...
- 123
-1
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1
answer
21
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Can we figured out the total money supply using MB? [closed]
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 ...
- 63
0
votes
1
answer
69
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Can m0 be created as a loan? [closed]
Are the following true?
m0 is only created by destroying something else (federal reserve deposits)?
m0 can be created as a loan?
Related questions: can something other than federal reserve deposits ...
- 63
1
vote
1
answer
36
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How does the Fed measure the shadow banking sector in the US?
It's apparently popular to say on TV [at 2:20 in that clip] that the Fed has no idea what's going on in shadow banking sector. To what extent is that true? (I could ask this on Skeptics as well given ...
2
votes
1
answer
366
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Is there some background/explanation why the Fed discontinued publishing their M3 indicator, circa 2006?
As Wikipedia says and as it can be easily verified, since 2006, the Fed no longer publishes an M3 indicator (unlike the ECB which still hangs on to that notion). So is there some background or ...
1
vote
1
answer
103
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Question about Federal reserve open market operations - reducing money supply
I'm trying to understand how open market operations work to reduce money supply.
So the Federal Reserve sells bonds... when this happens, the bank balances of the bond-purchasers goes down... the ...
- 115
1
vote
1
answer
92
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Why aren't open market operations a zero sum transaction?
I know that when the Federal Reserve buys Treasury bonds it increases the money supply, but I don't understand the process behind it. The model that I have given below (which is my best understanding ...
- 13
2
votes
1
answer
53
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The Fed Lowered Interest Rates, Are they going to buy Bonds?
I originally asked this question on personal finance/money because I didn't know that this exchange site existed. link to same question at person finance/money. Someone on that site mentioned that it ...
- 123
0
votes
1
answer
48
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Is it true that when the overall money supply decreases, that the demand for money decreases and the demand for bonds and securities both increase?
Is it true that when the overall money supply decreases, that the demand for money decreases and the demand for bonds and securities both increase?
I understand that to increase the money supply, the ...
-1
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2
answers
179
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Why doesn't the central bank extend loans directly?
I've been thinking about the credit theory of money lately and how it creates money. Since Banks look for sufficient reserves after extending a loan, and since the central bank always loans out money ...
- 343
0
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2
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76
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Considering how USD enters the market, is the USD actually unbacked? Could the USD represent a unit of a “fund” of securities held by the Fed?
From my understanding, all new money enters the market either 1) by the Fed lending it to banks, so the Fed essentially owns bonds in the exchange, or, 2) The Fed purchasing other financial assets. So ...
- 1
2
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0
answers
62
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Does Fannie Mae get money from the FED
Does Fannie Mae directly or indirectly get money that is printed from the federal reserve to buy mortgages, or have they ever? If so, when has this happened? How much money? What is the process by ...
- 121
9
votes
4
answers
3k
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Is the Federal Reserve issuing money in a fair way?
Basic logic says that, once a central bank is issuing new money for increasing the money supply, the money should be distributed fairly between all the citizens, and that means giving them all an ...
- 992
1
vote
1
answer
88
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Why did the rate of money supply growth accelerate from 1993-96 in the United States?
Even though the rate of growth in the monetary base decelerated — and the money multiplier decreased for the most part — from 1993-96 in the United States, the growth rate of the M2 money stock still ...
- 37
1
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3
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1k
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Basic Reason of Why the Money Supply Needs to Increase? [duplicate]
Hello, all. So I am trying to gain a thorough understanding of why the Fed, or any other Central Bank, needs to keep pumping money into the economy as it grows. My question is not asking why ...
- 125
3
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0
answers
62
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Why did the rate of money supply growth increase from 1993-96 in the United States?
Even though the rate of growth in the monetary base decelerated — and the money multiplier decreased for the most part — from 1993-96 in the United States, the growth rate of the M2 money stock still ...
- 31
3
votes
3
answers
3k
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What is the effect of Quantitative Easing on the US budget deficit?
Is the deficit getting larger because of QE?
- 193
2
votes
2
answers
75
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Can a government or central bank work to reduce inflation without hiking interest rates and causing the currency to appreciate?
Since trying to lower inflation will have some undesirable consequences, such as currency appreciation, which hurts exports, should governments and central banks keep hands off on inflation?
But ...
- 131
2
votes
1
answer
302
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Who owns the federal reserve?
Does anyone know who actually owns the federal reserve? It's like a public private institution, who are the private owners, and who are the public owners?
- 328
3
votes
3
answers
327
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By what steps and contracts does new money enter the economic system?
Like many noneconomists who read about economic history and finance, I always remain somewhat baffled by the opaque generation of currency under the federal reserve system. My understanding is that ...
- 273
2
votes
2
answers
175
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When the Fed increases the money supply, does any of the additional supply go directly to the government?
When a central bank increases the money supply, how much of it goes directly into the government purse? Say for example:
The money supply is $150
The populace has $100
The government has $50.
If the ...
- 241
8
votes
2
answers
2k
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How and when is M0 money created?
The Federal Reserve Coin and Currency Service Website
describes their currency order process thus:
The 7.2 billion notes included in the FY 2015 order reflect the Board’s estimate of net demand for ...
2
votes
1
answer
48
views
How could monetary policy be affected if cash "gifts" to consumers were more frequently used?
A few years ago in the US, everyone who filed taxes received a check for $1000.
If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
- 153
5
votes
1
answer
94
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What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?
What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?
Quantitative easing and unconventional policy actions such as asset purchases and ...
- 171
0
votes
1
answer
361
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What is the impact on the money supply of a reduction in the required reserve ratio? [closed]
In April 2011, the money supply was estimated to be 52 million hurls.
At the same time, bank reserves were 6.24 million hurls and the
reserve requirement was 12 percent. The banking industry, being
“...
- 17