In_PRP their_DPS landmark_NN1 1963_CRD book_NN1 "_PUQ A_ZZ0 Monetary_AJ0 History_NN1 of_PRF the_AT0 United_NP0 States_NP0 ,_PUN "_PUQ Milton_NP0 Friedman_NP0 and_CJC Anna_NP0 Schwartz_NP0 convinced_VVD many_DT0 economists_NN2 that_CJT M2_NP0 ,_PUN a_AT0 measure_NN1 that_CJT included_VVD both_DT0 checkable_AJ0 deposits_NN2 and_CJC other_AJ0 bank_NN1 deposits_NN2 that_CJT could_VM0 easily_AV0 be_VBI transferred_VVN to_PRP checking_VVG accounts_NN2 ,_PUN was_VBD a_AT0 powerful_AJ0 economic_AJ0 predictor_NN1 —_PUN so_AV0 much_AV0 so_AV0 that_CJT the_AT0 Federal_AJ0 Reserve_NN1 could_VM0 basically_AV0 cure_VVI the_AT0 business_NN1 cycle_NN1 simply_AV0 by_PRP keeping_VVG M2_NP0 growing_VVG slowly_AV0 but_CJC steadily_AV0 ._SENT In_PRP particular_AJ0 ,_PUN they_PNP argued_VVD that_CJT the_AT0 Fed_VVN could_VM0 have_VHI prevented_VVN the_AT0 Great_AJ0 Depression_NN1 if_CJS it_PNP had_VHD prevented_VVN M2_AJ0 from_PRP falling_VVG 30_CRD percent_NN0 from_PRP 1929_CRD to_PRP 1933._CRD But_CJC here_AV0 's_VBZ the_AT0 thing_NN1 :_PUN the_AT0 Fed_VVN does_VDZ n't_XX0 directly_AV0 control_VVI M2_NP0 ._SENT All_AV0 it_PNP controls_VVZ is_VBZ the_AT0 "_PUQ monetary_AJ0 base_NN1 ,_PUN "_PUQ the_AT0 sum_NN1 of_PRF bank_NN1 reserves_NN2 and_CJC currency_NN1 in_PRP circulation_NN1 ._SENT (_PUL It_PNP only_AV0 controls_VVZ the_AT0 sum_NN1 ,_PUN not_XX0 the_AT0 individual_AJ0 components_NN2 ,_PUN since_CJS people_NN0 can_VM0 decide_VVI to_TO0 withdraw_VVI currency_NN1 from_PRP banks_NN2 or_CJC put_VVB it_PNP back_AVP ._SENT )_PUR What_DTQ Friedman_NP0 and_CJC Schwartz_NP0 asserted_VVD was_VBD that_CJT the_AT0 Fed_VVN can_VM0 control_VVI M2_NP0 indirectly_AV0 —_PUN that_CJT it_PNP can_VM0 push_VVI monetary_AJ0 aggregates_NN2 up_AVP or_CJC down_AVP if_CJS it_PNP 's_VBZ willing_AJ0 to_TO0 move_VVI the_AT0 monetary_AJ0 base_NN1 enough_AV0 ._SENT The_AT0 2008_CRD financial_AJ0 crisis_NN1 was_VBD n't_XX0 kind_AJ0 to_PRP that_DT0 view_NN1 ._SENT The_AT0 Fed_VVN hugely_AV0 increased_VVN the_AT0 monetary_AJ0 base_NN1 ,_PUN but_CJC banks_NN2 basically_AV0 just_AV0 sat_VVN on_PRP the_AT0 additional_AJ0 reserves_NN2 ,_PUN so_AV0 that_CJT deposits_NN2 and_CJC hence_AV0 M2_NP0 did_VDD n't_XX0 rise_VVI much_AV0 :_PUN This_DT0 in_PRP turn_NN1 very_AV0 much_AV0 calls_VVZ into_PRP question_NN1 the_AT0 notion_NN1 that_CJT the_AT0 Fed_VVN could_VM0 have_VHI prevented_VVN the_AT0 Great_AJ0 Depression_NN1 ._SENT But_CJC that_DT0 's_VBZ another_DT0 story_NN1 ._SENT More_AV0 to_PRP the_AT0 current_AJ0 point_NN1 ,_PUN M2_NP0 has_VHZ in_PRP fact_NN1 soared_VVN during_PRP the_AT0 pandemic_AJ0 :_PUN And_CJC the_AT0 Fed_VVN has_VHZ indeed_AV0 bought_VVN a_AT0 lot_NN1 of_PRF government_NN1 debt_NN1 ._SENT But_CJC is_VBZ the_AT0 Fed_VVN really_AV0 financing_VVG the_AT0 budget_NN1 deficit_NN1 ?_SENT Not_XX0 really_AV0 ._SENT At_PRP a_AT0 fundamental_AJ0 level_NN1 ,_PUN households_NN2 are_VBB financing_VVG the_AT0 deficit_NN1 :_PUN the_AT0 funds_NN2 being_VBG borrowed_VVN by_PRP the_AT0 government_NN1 are_VBB coming_VVG out_AVP of_PRF the_AT0 huge_AJ0 savings_NN2 undertaken_VVN by_PRP families_NN2 saving_VVG much_DT0 of_PRF their_DPS income_NN1 in_PRP an_AT0 environment_NN1 where_AVQ much_DT0 of_PRF their_DPS usual_AJ0 consumption_NN1 has_VHZ n't_XX0 felt_VVN safe_AJ0 ._SENT However_AV0 ,_PUN household_NN1 financing_NN1 of_PRF the_AT0 deficit_NN1 is_VBZ n't_XX0 direct_AJ0 ._SENT Instead_AV0 ,_PUN it_PNP has_VHZ taken_VVN the_AT0 form_NN1 of_PRF a_AT0 sort_NN1 of_PRF financial_AJ0 daisy_NN1 chain_NN1 ._SENT Families_NN2 are_VBB stashing_VVG their_DPS savings_NN2 in_PRP banks_NN2 ._SENT Banks_NN2 ,_PUN in_PRP turn_NN1 ,_PUN have_VHB been_VBN accumulating_VVG reserves_NN2 —_PUN that_DT0 is_VBZ ,_PUN lending_VVG to_PRP the_AT0 Fed_VVN ,_PUN which_DTQ these_DT0 days_NN2 pays_VVZ interest_NN1 on_PRP bank_NN1 reserves_NN2 ._SENT And_CJC the_AT0 Fed_VVN has_VHZ been_VBN buying_VVG government_NN1 bonds_NN2 ._SENT Here_AV0 's_VBZ a_AT0 rough_AJ0 picture_NN1 :_PUN More_AV0 or_CJC less_AV0 ,_PUN households_NN2 have_VHB acquired_VVN $_NN0 2_CRD trillion_CRD in_PRP deposits_NN2 ;_PUN banks_NN2 have_VHB acquired_VVN $_NN0 2_CRD trillion_CRD in_PRP reserves_NN2 ;_PUN and_CJC the_AT0 Fed_VVN has_VHZ acquired_VVN $_NN0 2.5_CRD trillion_CRD in_PRP government_NN1 securities_NN2 ._SENT 
