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SPDR S&P 500 Message Board

  • blackoutbuzz blackoutbuzz May 7, 2013 11:44 AM Flag

    Fractional reserve banking

    dunrrunnin I'm re-posting this cause it's buried

    I checked that out on your previous suggestion and indeed a large percentage of the QE money is being put into reserve deposits. But if I understand the banking system correctly, banks operate on the principle of fractional reserves. Doesn't this leverage effectively mean most of the QE money is being deployed? I'd appreciate your insights...

    ---------

    You stated:

    That is an assumption on your part and on the part of many others. However I would suggest the following research project (since nobody here is going to take my word for it):
    1) calculate the total QE money for Jan thru Apr.
    2) How much have the reserve deposits at the FED increased over the same time period.
    Does that support your theory of where the QE money went?

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