Nonbank public Assets Liabilities Securities 100 Checkable deposits +$100 Banking system Assets Liabilities Reserves +$100 Checkable deposits +S100 Fed Assets Liabilities Securities +S100 Reserves +S100
Assets Liabilities Banking system Assets Liabilities Fed Assets Liabilities Nonbank public Securities -$100 Checkable deposits +$100 Reserves +$100 Checkable deposits +$100 Securities +$100 Reserves +$100
22 oMP from the nonbank Pubic When the Fed's check is depositedin a bank the net result of the Fed's open market purchase from the nonbank public is identical to the effect of its open market purchase from a bank reserves increase by the amount of the open market purchase, and the monetary base increases by the same amount
2.2 OMP from the Nonbank Public • When the Fed’s check is deposited in a bank, the net result of the Fed’s open market purchase from the nonbank public is identical to the effect of its open market purchase from a bank: reserves increase by the amount of the open market purchase, and the monetary base increases by the same amount
2.2 OMP from the Nonbank Public Case 2- Assume that the person or corporation sells $100 of securities to the Fed, and cashes the Fed's check for currency
2.2 OMP from the Nonbank Public • Case 2: • Assume that the person or corporation sells $100 of securities to the Fed，and cashes the Fed’s check for currency
Nonbank public Assets Liabilities Securities 一$100 Currency $100 Fed Assets Liabilities Securities +$100 Currency $100 The net resut of this Mpa Currency increases by $100 MBEC+R As C increases, MB will increase by the same amount
Assets Liabilities Nonbank public Securities -$100 Currency +$100 Assets Liabilities Fed Securities +$100 Currency +$100 The net result of this OMP: Currency increases by $100 MB=C+R As C increases, MB will increase by the same amount