Posted by WARREN MOSLER on July 30th, 2009
This should be more than enough to dismiss concerns of reserves influencing lending, apart from price.
Hope they do a full public relations effort on this.
A touch weak on fully dismissing the ‘money multiplier’ but certainly 99% ‘there:’
“The general idea here should be clear: while an individual bank may be able to decrease the level of reserves it holds by lending to firms and/or households, the same is not true of the banking system as a whole. No matter how many times the funds are lent out by the banks, used for purchases, etc., total reserves in the banking system do not change. The quantity of reserves is determined almost entirely by the central bankâ€™s actions, and in no way reflect the lending behavior of banks.”