So this is a visualization of the Fed balance sheet.
Currency in circulation is always going up and stands at $1.8 trillion. So the Fed has been decreasing its assets on the balance sheet and thereby decreasing reserves, which stand at $1.4 trillion. The amount of these reserves is too low and gave symptoms of liquidity problems.
These liquidity problems came from large and small domestic U.S. banks. We also know specifically that it was JP Morgan.
So now the Fed needs to increase its balance sheet to increase reserves again. And on top of that it needs to keep pace with the increasing amount of currency in circulation.
Currency in circulation is always going up and stands at $1.8 trillion. So the Fed has been decreasing its assets on the balance sheet and thereby decreasing reserves, which stand at $1.4 trillion. The amount of these reserves is too low and gave symptoms of liquidity problems.
These liquidity problems came from large and small domestic U.S. banks. We also know specifically that it was JP Morgan.
So now the Fed needs to increase its balance sheet to increase reserves again. And on top of that it needs to keep pace with the increasing amount of currency in circulation.
Currency in circulation at $1.8 trillion:
Reserves at $1.4 trillion:
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