I haven't been able to get this subject out of my mind. Rifek's comment clarifies so much. But some things are evident. We need to know the terms on which the QE money is supplied to those fortunate few. I doubt that it is just like giving them cash. And, if a bank uses the money to make a loan then reserve requirements still apply, but the 'mulitplier' is like for Repo 101: one over the reserve requirement. And what is the duration of this money and is it accompanied by a reverse repo agreement? But even with a 5% reserve requirement the effectiveness of the face value of the QE money would be 20 times the face amount. And then there SHOULD be at least the same prudential requirements for due diligence, but we have seen how concerned the Fed is with that.


"It is not necessary to have hope in order to persevere."