Printing Money Without Causing Inflation: The 2.5 Trillion Dollar Question

Research Team

A new article about excess reserves is here:

The article is about how much of the money created via quantitave easing is still held at the Fed in excess reserves, and how rising interest rates may affect this.

Opening paragraphs:

At last count, there is more than $2.5 trillion in excess reserves held at the Federal Reserve. These are funds that are held by banks but are currently not being used in regular banking activities. This money could be lent as businesses loans, mortgages, personal loans, or any other lending activity in which banks partake, but is is not. It is simply sitting idle in accounts held with the Fed.

The Federal Reserve, in its role as a central bank, requires banks to hold part of their deposits on reserve within the Federal Reserve banking system. This is done to ensure the availability of liquid cash in times of need. The minimum portion of...

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The Only Investing Strategy You Will Ever Need

Research Team

We recently published what is perhaps the cornerstone of our investing approach in the form of an extremely simple investing plan. We truly believe that this is the only investing advice you ever need to follow.

You can read the complete article here:

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The upcoming Fed interest rate hike and its affect on the stock market

Research Team

The Federal reserve is planning to raise interest rates either in a few weeks time in September or possibly December. Either way, interest rates are expected to begin to rise before the end of 2015. Over the past year, we have been looking into the effect of rising interest rates on stock market valuations.

We looked at long term market valuations for the S&P 500 index. The bottom line is that while stock market valuations are primarily determined by corporate earnings, interest rates can push earning multiples up or down. Moving from near zero rates upwards, price to earnings ratios can be expected to move down by roughly one multiple per interest rate percentage point raise.

We have published a summary of some of the things we've learned here:




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