Increasing “Excess Reserves” The demise of fiat-money regimes around the world has become unmistakable. They can only be kept alive by central banks creating ever-greater amounts of base money and governments underwriting commercial banks’ liabilities. The US Federal Reserve, for instance, increased the stock of the monetary base – which includes banks’ demand deposits held with the Fed, plus coins and notes in circulation – from $870.9 billion in August 2008 to $1735.3 billion in January 2009. Banks’ “excess reserves” – banks’ base-money holdings minus required reserves – rose from $1.9 billion to $798.2 billion. These excess reserves allow the … Continue reading There Will Be (Hyper)Inflation