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First Indication that the St Louis Fed Knows Bernanke is a Mad Scientist

David Wheelock, VP research Division at the St Louis Fed (and author of The Strategy and Consistency of Federal Reserve Monetary Policy 1924-1933, Cambridge University Press, 1991) pens a note that points out facts known here at EPJ for at least a year: 1. That the money supply has not been increasing 2. That the money is sitting as excess reserves but could come flying out at any time 3. That Bernanke will never be able to drain enough reserves to halt a dramatic increase in inflation if the trillion comes flying out with any momentum at all (No one has a clue in advance how much draining the Fed will be able to pull off ) 4. That the Fed may try to increase the interest rate on excess reserves (IOER)to halt banks from using those reserves. (No one has a clue in advance as to how high interest rates may need to be raised to stem the outflow of excess reserves into the system) Bottom line: The St Louis Fed knows Bernake is a mad scientist that has concocted a money control structure with his new "tools" that is likely at some point to blow the entire economic system in a thousand different directions

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