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| Graph #1 |
Not sure if these two lines belong on the same graph. The red line shows total reserves as a percent of the monetary base, same as yesterday. The blue shows total reserves as a percent of "Note and Deposit Liabilities" for an earlier time.
Sure looks to me like the two lines fit together.
Let's assume they do.
ReplyDeleteSo - except for the 2 WW's causing aberrations [in opposite directions, no less] the %age of total reserves fell steadily - and with quite impressive regularity - over a century of record keeping.
Then it sharply corrected.
What are we to make of that?
Cheers!
JzB
#1: Financial Innovation drives reserves down until there is a crisis.
ReplyDelete(I don't know how that sits with the reserves-don't-matter people. But intuition tells me that reserves matter more when there's a lot of 'em, or rather, when the reserve requirement requires there to be a lot of 'em.)
Other than that...
I thought I could see a hundred-year downtrend and I thought that was an interesting thing to see.
"...the %age of total reserves fell steadily - and with quite impressive regularity - over a century of record keeping.
ReplyDeleteThen it sharply corrected."
One could say that the sharp correction is an admission that the hundred-year downtrend was a mistake. This would be useful to me, if policymakers were saying that they made a mistake in monetary policy.