“Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation.”
I’m curious as to how M2 could not increase when the Fed does their open market operations. Where does the money go? Could someone explain.
[quote]tmay11 wrote:
“Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation.”
I’m curious as to how M2 could not increase when the Fed does their open market operations. Where does the money go? Could someone explain. [/quote]
Most money is not crated by the banks but by private banks.
As long as they are not lending money to someone, which they do not do right now, inflation stays down.
Also, the CPI as measured in the US is a joke.