Bernanke is printing like a madman, and has so far added more than $1,000,000,000,000 in the global pool of dallars. We can see that the monetary base had kind of stabilized between $1.6 trillion and $1.8 trillion, but they have recently been printing even more. Just $200 billion, a drop in the bucket of what Bernanke is promising. That's what we call inflation (source: Fed).
Bernanke decided about 2 years ago to pay interest on the money that depositary institutions keep at the Fed. The fact that those institutions borrow the money at 0% from Bernanke and who then pays them to store it at the Fed doesn't seem to chock anyone. Nonetheless, it took about 2 years of accrued interest on those reserves, and the introduction of Mark-to-Fantasy to replace Mark-to-Market to recapitalize by 50% the banks. With the losses on Option-ARMs and CRE coming now, chances are that this chart is going to spike up very soon (source: Fed)
Notice that there is about $9 trillion worth of bank credit today, and that there were about $9.5 trillion a few months ago. Also look at the trend that has been broken. Credit moved from litterally nothing to about $10 trillion between 1975 and 2007. This broken trend is highly deflationary (source: Fed).
The phantom excess reserves of banks keeps growing.
Three reasons for that:
- those reserves are not real as mark-to-market has been replaced by mark-to-phantasy
- the money that banks have is deposited at the Fed where it stays liquid, risk free, and yet bring interest thanks to the good will of Bernanke
- banks are not lending (and for good reasons!) to insolvent people and companies.