Unsinkable-
It doesn't, the money multiplier is mumbo jumbo.
Banks are never reserve constrained, they can always lend money if they have a creditworthy borrowers. Loans create deposits. The discount window is always available to clear reserve balances even if banks cant get funding from the money market because things are tight.
Thats why Qe2 failed, just because you give banks more reserves doesnt mean it increases their ability to lend..
It's also why hyperinflation won't occur via and QE..
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Unsinkable-It doesn't, the money multiplier is mumbo jumbo.Banks...
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