Take Me to St. Louis

The St. Louis Fed produces a plethora of data on money. Three years into the experiment, many still miss the distinction that we are operating under a monetary regime.

As the chart shows the level is an All Time Forever Record High.

74% of the money creation has remained as Excess Reserves. Velocity has fallen dramatically but is hovering close to the long term average. The Excess Reserves are the assets in the banking system. C$I loans have shown a pulse but there is no directional desire by banks to transform ER into C&I. This is the problem with the ad hoc nature of the Fed program. What is the objective? (inflation expectations have risen) More importantly, what is the guiding measurement?

The Euros have tried to dance between the 2 regimes. rate targeting at the ECB official level and quantitative at the system level. Throwing IMF austerity on top of the confusion is producing obvious Growth consequences. The Fed 's job is much easier. The target should be higher growth. The creation we have now is nothing more than a giant monetary Ice Age. A policy that now focuses only on maintaining the arbitrary present level of stock produces nothing if the above mentioned transformation of bank balance sheet assets does not occur.

As Shawn Mullins sang, "Oh what a beautiful wreck you are."

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