The Fed and The Money

I'm not able to make any intelligent comment on that chart, but I do understand a couple of things from the accompanying Matt Yglesias post, The Money Base Is Irrelevant:

Banks are required to keep a certain amount of non-lendable money in reserves. Now check this:

[As] these charts show, there's a veritable avalanche of money the Fed could unleash upon the economy were it not deliberately paying banks to keep the money out of play.

[…]

[In] 2008, Ben Bernanke decided that the Fed should start paying interest on excess reserves and also embarked on a large increase in the monetary base. The chart makes clear, however, that relative to trend all of this money creation has just gone into excess reserves.

  Slate

Gee. Imagine that. The Fed starts paying interest on excess reserves (reserves that banks voluntarily keep beyond the requirements), so banks start putting more money into excess reserves. Who would have imagined?  That money they were given (after they took part in the worst financial boondoggle in modern history) for the purpose of making new loans and getting the economy back on its feet - that money from taxpayer pockets, we might add - didn't quite make it where it was supposed to go, and all the while I have been hearing people blaming the banksters (rightly) for not circulating it, but I heard no one talking about the fact that they were not only not circulating it, but they were making money on it through Fed interest payments!  I missed that piece.  I assumed they were investing it.  Ha!  That would have been taking a risk. In the end, the result of the money being kept out of public hands, to do what it was supposedly going to do, is the same either way, but the fact that the Fed set it up intentionally to benefit the banksters is a far cry from the public claim that it was intended to benefit the public/economy.

This may be old news to you, but it's the first I've seen it.  I didn't think I could be more disgusted with Ben Bernanke (and his enablers in the White House).  How wrong I can sometimes be.

So all this recent talk about how the Fed is doing such an intricate balancing act these days, and how Bernanke decided in his great wisdom not to print more money at the moment – excuse me, I meant engage in quantitative easing – completely ignores the fact that the money is already there and could be circulated if the Fed would stop paying banks to hold onto it. Why are we even arguing about printing money - I mean, quantitative easing?  The banksters are being further enriched while we argue over a red herring. Which we’ll be lucky to be able to afford to eat once a week if things go on the way they are.

...but hey, do what you want...you will anyway.