Is it possible that inflation can be found in the fact that banks are less willing to loan out money? Maybe this sounds weird, but let me explain. The fact that banks won’t loan might have to do with how low the interest rate is. That is, they value the money more now than the money they would get in the future from the interest payments. This means that they expect the money to be less valuable in the future than the interest rate reflects, therefore they’re expecting inflation. Therefore, the interest rate should be increased.
I’m no expert but this makes some sense. Do you think there is a middle point where the banks have gottent the perfect amount of money and would feel confident enough to loan it out? Maybe they recieved too much money to loan it out combined with the lack of return from interest rates…
At this moment, all printed dollars are on excess reserves and not on circulation.
This is a pretty confused analysis. And I’m not sure what you mean by that last sentence. Especially the last three words. It makes it sound like you’re advocating central control of the price of money. But to get to the question of the thread title, it’s all around you:
see here for more and even more recent data:
Why Are Food Prices Rising So Fast?
Or how about:
Would you like some more locations?
In the case where we seem to have to have the federal reserve, what I meant was maybe this situation shows that the interest should be increased at this time.
My portfolio can’t wait until those reserves are put into circulation. It might happen early next year to make Obama look good.
"http://mises.org/daily/5110/Three-Flawed-Fed-Exit-Options
At this moment, all printed dollars are on excess reserves and not on circulation."
This actually helps my case.
“It makes it sound like you’re advocating central control of the price of money.”
Really what I was saying was that this might reflect what the market interest rate would be, at least a little bit.
DOW industrial average over the past year. This is where they spend the money that they can’t lend right now.
Banks borrow short and lend long. So yes, if banks are sensing inflation, they will not lend short-term funds (because they expect short term interest rates to rise, but they lend to longer maturities which leads to a loss when short term interest rates do rise). But there are probably lot of other reasons why they don’t lend.