Phil Gramm and Mike Solon (“Why the Fed May Not Duck Inflation This Time,” op-ed, May 29) are perpetuating the myth that paying interest on reserves allows the Fed to purchase large amounts of debt without massively increasing the money supply. This belief is demonstrably false. The checkable deposit portion of the M1 money measure (the only part of the M2, M3 or any other money measure that the Fed can directly influence) increased from $653.8 billion on Sept. 15, 2008 to $2.3 trillion on Dec. 30, 2019; M1 increased from...

Source: Wall Street Journal June 07, 2020 20:37 UTC