how long of a period was there where ‘we’ werent back to 100 percent reserves??
100% reserves is a bit of an exaggeration.
A low money multiplier means a liquidity trap, that is, government needs to increase deficit spending to b(r)ing(e) the economy back on track as banks dont want to lend out the money.
We could start a debate about the subject of liquidity traps, but I don’t know if it’s worthwhile. Why do you think the banks don’t want to lend money? Where does the government get the money when it deficit spends?
A “liquidity trap” does not exist. It is a fiction created by economists to explain why money printing fails to “stimulate” the economy. ABCT explains what is actually going on. The cure for the economic disaster is to restore free market price signals, and allow capital to follow those signals into the areas being demanded.
Deficit spending is a disaster. It will prolong and deepen the crisis because scarce capital is being squandered into areas that are not demanded. Deficit spending moves a pile of money from one place to another, with no change in the economic situation as a whole except for the squandered resources. The broken window fallacy is on display. But, that is the policy being implemented, and this supposed recovery is not a recovery; it is a bounce that will top out, and we’ll see the next painful leg down.
It means that Ben Bernanke is paying the banks not to lend.
That’s a very good question that I see nobody has really answered. As far as I can make out, there is no such thing as “THE money multiplier”. Instead there are a class of different, but related “money multipliers”. They are all ratios between some measure of real money or base money, and some higher up measure of the money supply (M1,M2,M3,M4). Sometimes you see it described as being the ratio of the total amounts, and sometimes you see it defined as ratios of changes in the total amounts.
If we take the money multiplier defined as the money supply vs base money then this is way more than 1.0 even today.
If we take the money multiplier defined as changes in the money supply vs changes in base money then this could well be less than one today because the total money supply can easily shrink in an environment where people are keener to pay back loans (making money disappear under FRB) rather than take out new ones (creating money under FRB).