Jim,
You result does not surprise me. I have been following excess reserves
since the beginning of the crisis and they are off the charts. If you
graph excess reserves a few years before the crisis and then into the
crisis you cannot even see excess reserves before the crisis because in
relative terms they were so small compared to what they are today.
Rudy
Jim Devine wrote:
Today, I calculated the "M1 multiplier," i.e., the ratio of the amount
of checkable bank deposits and currency in circulation to the "high
powered money stock" (currency + bank reserves). This measures credit
creation by banks based on fiat money (money made by the Fed, with the
government's backing).
What's weird is that in December 2008 and January & February 2009,
this number has been less than one (0.98, 0.92, and 0.98). That's a
sign that commercial banks are refusing to lend. The increase from
January to February is a sign that there's a glimmer of financial
recovery.
--
Rudy Fichtenbaum
Professor of Economics & Chief Negotiator AAUP-WSU
Department of Economics
Wright State University
Dayton, OH 45435
Phone: 937-775-3085
Fax: 937-775-2441
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