- Currency in Circulation has increased by approximately $96 billion (4%), from October 2021 through February 2023. That’s largely due to Janet Yellen drawing down the Treasury’s TGA – its own form of fiscal stimulus. This effort has essentially offset the Fed’s QT efforts.
- Bank Reserves have decreased by approximately $1.10 trillion (-27%) over the same period.
- The Monetary Base (Currency in Circulation plus Bank Reserves), has decreased by approximately $1.01 trillion (-16%) over the same period (see table and charts below). My view is that tightening the Monetary Base will eventually curb inflation, especially now that the banking community has further tightened in the wake of SVB and general banking turmoil.
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