The Federal Reserve made about nine trillion dollars in overnight loans to big banks cnn-money reported in 2010. http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/
The earlier financial crisis stimulated a lot of Federal lending then and later during the Obama administration at zero interest. For each dollar the Fed electronically loans a bank can loan out five electronic dollars and when those loans are paid the bank has in effect minted five dollars and it must give just one back to the Fed.
If the Fed makes four trillion dollars of zero interest loans to banks in some year then in effect the Fed reserve has allowed big bank borrowers to create 20 trillion electronic dollars for-themselves. They can keep that money laying around in current accounts I guess when its repaid, or buy up more housing and franchises around the country. I don’t know how much cash actually was lent out at zero ior very small nominal interest by the Federal Reserve during the Obama years yet it may have been trillions and trillions.
So that’s why I wondered about inflation and the role that electronic dollars held by big banks and concentrated wealth has on effecting it. With so comparatively few dollars in currency or existing at all-maybe 5% as much money as e-dollars, the idea of money supply has changed. It is no longer paper money that can be too abundant or too rare with no e-dollars. Corporate would seem to effect inflation as much or more than the government policy-especially since big banks can perhaps issue their reserves in whatever way they like in the form of loans, acquisitions and so forth. And of course they earn revenue on all of the money transitions actions.
Not being an economist nor spending too much time thinking about monetary policy I can just stand rather amazed and the apparent strangeness of U.S. Government financial and monetary policy. Inflation would seem to be rather an artificial contrivance with values set by Butch Street Banks and Corporate policies.
It’s been reported that 50% of Americans share fewer that one-half of one percent of the national income. With 1% of the nation controlling most capital and the 50% having little, inflation that occurs to those for whom buying groceries and ordinary things for living, and with that inflation occurring in one-half of one percent of the economy it would perhaps be as meaningful as a flee to a donkey. The vast bulk of the national wealth and capital expressed in e-dollars would not be a money supply problem of a print paradigm.
Garrison Gibson: books and blog 