Friday, March 13, 2009
Another fallacy: Fed "printed too much money from 2001-2008"
We hear this all the time, but it is just not true!
Growth in the monetary base (Federal reserve notes, coins and bank reserves), or the monetary aggregate the Fed has the most direct control over, collapsed to near zero in the period from 2001-2008.
Private sector "money" (credit) was created in the private financial system (banks, intermediaries), while the Fed and the government was limiting the issuance of its own money.