CHART OF THE DAY: The Biggest Myth About QE2 Gets Busted

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To really understand what’s going on with the Fed and QE2, you must understand this chart from Nomura’s Richard Koo, who points out that despite all of the “printing” (expansion of the balance sheet) there’s no more money at all out there in the economy.

Money Supply has barely grown, and loans and leases in bank credit continue to fall.

All that’s happened from QE2: By bidding up Treasuries, investors have been forced to put their money elsewhere (stocks, commodities, etc.).

chart of the day, monetary base, may 2011