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Banks Parking $1.46T in Reserves at the Fed

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  • Description

    FBN’s Liz MacDonald on the cash U.S. banks have at the Federal Reserve.

  • Duration 2:02
  • Date

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Well banks have more than one trillion dollars sitting in the -- that the Federal Reserve announced some say it is high time the banks are putting that money to work.

We -- -- get the bottom line.

Yeah that's right -- PO the Fed's balance sheet and or night table at home but I'm pretty geeky united reading it.

I think it's something and you know we talk a lot about the debt ceiling and -- fiscal cliff.

What's gone unnoticed as what's happening at the Federal Reserve this has big implications for the US economy we're -- look at this one point 46 trillion bucks in -- reserves parked at the Federal Reserve.

And it could rise to two point six trillion bucks by next year so look at this graph line we're gonna show you.

Basically got through the decades good -- back to 1960.

You gonna see.

The basically that -- -- the amount that was park there.

Flat lining through 2010 and look at that spike higher at that far right wow look at that it's it's now trending.

Well torture trillion dollars and north of that by next year.

-- we're talking about is what happens when the Federal Reserve drops a zero point 25% interest rate it.

Basically pays banks to park that money at the -- -- what instructed to zero -- all that money come flooding back into the US economy would it grade inflation the Federal Reserve says you know what we can actually raised that interest rate and keep that money parked at the Federal Reserve number is -- banks half percentage point that the cause long rates to spike higher to and in other news that's gone totally unnoticed right now.

The -- and -- reserve's balance sheet get this is gonna hit.

More than three trillion dollars by the end up.

February by the end of next month Tracy so that's a big deal and so we're talking about is for the first time offenders -- -- says that explicit unemployment target rate.

-- around six point 5%.

And you can imagine that the Fed's balance sheet is going to continue to balloon until we get that jobless rate down trees in -- -- -- -- -- three trillion dollars is a big figure and that number's gonna continue to rise back to us from.

Visit McDonald's thank you sure I'm up from on the ledger -- there really isn't of those -- by.

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