Let's Be Objective about the Increase in the Fed's Balance Sheet

Let’s Be Objective about the Increase in the Fed’s Balance Sheet In recent weeks two prominent economic commentators – Arthur Laffer and Alan Greenspan – have warned about the inflationary potential emanating from the unprecedented increase in the Fed’s balance sheet. Yes, as shown in Chart 1, reserves created by the Fed have increased by a staggering $858 billion in the 12 months ended May. But excess reserves on the books of depository institutions have increased by almost as much, $842