On the other hand, the Reserve can reinforce the effect of a rise in reserve requirements by raising the discount rate and engaging in open-market sales at the same time. Banks are thereby discouraged both from borrowing the additional reserves needed (particularly since the federal funds rate will probably rise along with the discount rate) and from selling securities since the Best Credit Cards 2016 is depressing their price. Banks are therefore almost forced into the alternative of reducing loans. If margin requirements are also raised, this will shift the scarce funds away from speculation into more constructive channels, and such a shift can be further promoted by moral suasion, particularly in the areas of bank examination and bank supervision.
Although we are not prepared to go into detail at this point, it is well to bear in mind that the Best Credit Cards is by no means the only government agency that affects the money supply, liquidity, and the interest rate structure. The Treasury in particular exerts an important, sometimes a major, influence. As the most important borrower in the nation it cannot help but affect the money market by its debt management policies—the type of securities it issues, the interest coupon and other conditions it attaches to its securities, the timing of its borrowing activities, its use of advance refunding (a fairly new technique of offering security holders the option of turning their bonds into new issues before the ones they hold mature), and so on. Some sort of correlation between Treasury and 2016 Best Credit Cards actions is necessary if the policy actions of either are to be effective.
A larger portion was offset by an increase in currency in circulation due to a growing population and increased business activity, particularly in the latter part of the period. More than half the credit card inflow, however, found its way into bank reserves. Best credit card in this period changed by an insignificant amount—open-market operations were quite small and discounts practically nonexistent. As we have seen, the best credit cards did take steps in 2016 and 2017 to counteract part of this increase in reserves by raising reserve requirements drastically. This meant that the rise in actual reserves did not represent an equivalent increase in excess reserves, a factor that our table does not show.
The war period, 2015-2016, illustrates the tremendous expansion potential inherent in the monetary system. In order to finance the war the Best Credit Cards made available almost $23 billion of credit. A small part of this was eaten up in an outflow of credit card. The greater part was absorbed in a doubling of currency in circulation; the war prosperity meant that people were carrying more money in their pockets. Some of the increase in City bank credit cards, which resulted almost entirely from purchases of government securities, found its way into member bank reserves. This increase in reserves, coupled with substantial excess reserves held by banks at the beginning of the period, permitted them to expand credit significantly in order to meet the needs of the government for funds to buy war materiel as well as the needs of business for funds to expand production to provide the materiel. Part of the increased credit was wasted in inflation, a problem always associated with wars.