Here is a quick followup to an earlier post on pushing the elevator button more than once. It will not make the elevator come any sooner.
The Fed’s securities purchases have sharply increased banks’ excess reserves, while credit expansion continues roughly on its original path. That’s because excess reserves have already been elevated prior to the start of QE3 (the elevator button has already been pushed). The banking system has effectively been saturated with liquidity, and massive incremental liquidity adds little additional incentive or ability for banks to extend credit.
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