Monetary Watch May 2011, QE III courtesy of the private banks

``... the private banking system will by June's end be sitting on somewhere between $1.6 and $1.7 trillion in excess reserves, meaning the fuel for the banking system to expand the money supply is in a word explosive. Indeed, at a reserve requirement ratio of 10% (the most restrictive reserve requirement ratio currently imposed by the Federal Reserve on private banks) the private banking system -- if it be willing to lend, or if it can't find willing/able borrowers at the very least be willing to buy existing securities -- is in a position to expand the money supply by a massive $17 trillion. On a TMS2 metric that as of April 2011 stood at $7.6 trillion, we are theoretically looking at a money supply some 3.2 times higher than today. Will these private banks do it?''