Sunday, September 6 2026
Sunday, September 6 2026
MONETABRIEF – The US Federal Reserve has made a stronger statement on its commitment to 'price stability', but has decided to maintain excess liquidity in the banking system, which has led to asset price bubbles, generally higher inflation and voter unhappiness.
"The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate," the Federal Open Market Committee statement said.
"The Committee reaffirmed its policy of maintaining ample reserves in the banking system."
Ample Reserves are excess liquidity, which classical economists called 'super abundance of paper money' or 'superflous money' which led to asset price bubbles, high inflation and eventually social unrest, political unrest and the toppling of governments and monarchs.
Before ample reserves (also called abundant reserves) which leads to a single policy rate of floor systems which started after the collapse of the housing bubble, central banks operated scarce reserve regimes.
"Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong," the statement continued.
"Job gains have kept pace with the workforce, and the unemployment rate has changed little."
The Fed operates a so-called dual mandate where it tries to operate a full -employment policy by printing money, which originally led to the 60s inflation, collapse of the Bretton Woods and the Great Inflation.
The housing bubble was triggered by pure 'reflation' also known as the false deflation scare.
By trying to target multiple objectives, the Fed has failed in providing price stability for many years for ordinary Americans while stock markets are booming.
"Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy," the statement said.
"The Committee will deliver price stability."
Former Fed Chief Jerome Powell, under whom the Ample Reserves Regime was legitimized, use to refer to maximum inflation and 2 percent inflation, seemingly prioritizing employment over low inflation and economic stability. (Colombo/June18/2026)
| 3 month bill | 9.22% | 22bp ▼ |
| 12-m bill | 9.91% | 10bp ▼ |
| Gold (Ounce) | $4602 | - - |
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