This is probably a misguided question but I ask as much for a correction of my premise than for an answer to it: Can the Federal Reserve decide, if in the case of high price inflation, to evaporate the excess reserves that are being held there? I ask this under the premise that the money was loaned to the banks by the Federal Reserve in the first place and so the Federal Reserve has the option of recalling those loans, thus just securing the excess reserves for itself.?????? Does this make sense to you? Also, I have heard that the excess reserves are being used as collateral for other leveraging to buy assets by the deposit banks. That to me is the same concept as fractional reserves and the money is, indeed, circulating. Please try to explain what is going on right now even if you do not fully understand my question. Thank you.
