Depository Institutions 1,491,045 M
Footnote m. Deposits, Depository Institutions
Depository institutions' deposits represent the reserve and service-related balances, such as required clearing balances, in the accounts that depository institutions hold at the Reserve Banks. The interest rates paid on required reserve balances and excess balances are determined by the Board of Governors, based on an FOMC-established target range for the federal funds rate. Interest payable is reported as a component of "Interest payable to depository institutions" in the Combined Statements of Condition.
Source: http://federalreserve.gov/monetarypolicy/files/BSTcombinedfinstmt2012.pdf
See pages 5 and 16.
Never before in accounting history, has so much money been explained by so few words. And, I believe it's a lie. Most of this account balance is not reserve balances.
We are supposed to believe, as of 12/11/2013, institutions have left 2.5 trillion in excess reserves at the Fed to be paid 25 basis points interest. And, excess reserves increase by 85 billion every month paid the same 25 basis points interest. Further, would not short term rates rise if 2.5 trillion in funds were taken out of circulation in excess reserve deposits?
Source: http://federalreserve.gov/releases/h41/
I offer the following estimate as an alternative accounting. It is oversimplified and not accurate, but it is certainly more accurate than the Fed's disclosed accounting:
12/31/2012 Institutions' Deposits (M) -Debits Credits
Required Reserves 60,000
Excess Reserves 447,541
Money Creation Account 1,712,327
Money Elimination Account -728,823
Total 1,491,045
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