Thursday, December 27, 2012

With all the Fed activity, there has been no QE in 2012

By definition, any policy of "quantitative easing" involves the expansion of bank reserves (by outright purchases of securities) and ultimately the monetary base. Neither has been expanded by the Fed in 2012.

Reserve balances with Federal Reserve Banks: Wednesday level (source: FRB)

Source: St Louis Fed

Clearly, given the latest announcement by the Fed (see discussion), 2013 should see both measures spike sharply. But there has been no "money printing" in 2012.
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