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>   
>   (email exchange)
>   
>   Yesterday I was rereading Ben Bernanke’s Wall Street Journal piece of July 21 2009.
>   I noticed that the Krugman words quoted in your blog (“The banks don’t need to sell
>    securitized debt to make loans — they could start lending out of all those excess
>   reserves they currently hold. ”) were the same as Bernanke’s (’But as the economy
>   recovers, banks should find more opportunities to lend out their reserves.’).
>   
>   Why would Bernanke say this? Since when do banks need to lend out of reserves?
>   

They don’t. In fact, at the macro level they can’t. Lending does not ‘use up’ reserves.

Both Krugman and Bernanke unfortunately don’t seem to fully understand monetary operations.

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