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Message Subject China Just Threatened a Currency War If the Fed Doesn’t Stop Printing
Poster Handle Crazy Harriet
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There is plenty of money now, but the banks that have received the fed's largesse and now hold well over a trillion dollars (1.4T, last time I checked) in "excess reserves" at the fed, cannot take those funds and use them to stimulate the economy.

On the contrary, they must keep the money at the fed as a condition of receiving the fed's bailouts. This has the effect of sterilizing the money and keeping it from causing inflation, which is the normal situation in a fiat economy when economic activity is pursued. In other words, if they loan it to "main street", the inflation game will explode and the fed won't be able to keep rates artifically low.

A direct and nearly-immediate result of this is believed to be (by the fed) that interest rates would rise and the USG would be unable to service its debt.

thus...

The fed has painted itself into a corner and will continue as they are ad infinitum, or it's game over.
 
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