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Strategies & Market Trends : The coming US dollar crisis
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To: ggersh who wrote (40319)7/23/2011 12:12:54 AM
From: Real Man  Read Replies (2) of 71463
 
"Reserves" is more like a checking account at the Fed, so the answer is yes. When the Fed
bought crap in QE2 or treasuries in QE2 and QE3, they created money out of thin air to buy
these assets from Fed money center banks, such as JPM or Goldman. The member banks get a
credit in their checking account with the Fed, while the crap the Fed buys from banks (in QE2)
goes on Fed balance sheet. Supposedly treasuries (bought in QE3) are not crap -g-

The some of $$$ on these checking accounts with the Fed form these "reserve balances".
The Fed can pay interest on these "reserve balances" like any other bank. The point is,
this is cash, it's not "working", banks have not used it. Pretty much it's cash -g-

Banks can lend that cash or buy debt securities with it, but it ain't happening.
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