Money Matters Presentation
Who Holds the Leash?

Who Controls Bank Reserves?

No one.

"Control" connotes precision that does not exist in the processes used by the Fed. Banks, on the other hand, cannot act totally independent of the Fed or their customers.

Who has the greater influence?

The parties involved in the creation of bank reserves can only exercise influence. But who has the greater influence?

The Fed?

Member Banks?

Borrowers?

You decide

Now that you understand the processes, you can make your own decisions about who has the greater influence over reserves, ergo the growth of the money supply.

From the Fed's role in influencing bank reserves, let's turn to Fed's role in Influencing Interest Rates.