Daniel Davies wrote:
> This might be a bit less vague; as discussed last
> year, a fairly high proportion of the US' money supply
> is part of an unregulated and uninsured secondary
> banking system (the money market mutual funds) which,
> to my untrained eye, looks very vulnerable indeed to
> bank runs (or something similar enough to bank runs
> that I'm not going to quibble).
>
> When we discussed the question of whether MMMFs were
> money, I think we concluded that the Fed could control
> this part of the money supply
> _under_normal_conditions_, because it controls the
> interest rate. But I'm not sure how one would go
> about bailing it out, or how one would prevent this
> part of the money supply from more or less evaporating
> in crunch conditions.
.
Do we have any numbers on this? Is the current percentage of "deposits" in uninsured "accounts" high by historical standards?
Seth
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