2 votes

An Additional $15 - $24 Trillion To Be Added To The Money Supply?

Michael Pento wrote an article on King World News discussing how Bernanke can add liquidity without more QE. I'm not an expert so please do your own homework on this and absolutely correct me if I'm wrong (if I misrepresented anything, it was unintentional).

From what I understood, I think he's saying that American commercial banks have $1.42 trillion in excess reserves that is sitting at the Fed collecting .25% interest. Apparently, Bernanke might remove that interest or even start charging the banks for leaving that money at the Fed. In either of those 2 scenarios, the banks will look to move all of that money elsewhere. If $1.42 trillion is injected into the economy, there's a fractional reserve multiplier that will turn that into somewhere between $15 - $24 trillion new dollars. That would cause the price of gold and other commodities to sky-rocket.