For the last couple of months, we haven't really seen the adjusted monetary base shoot up. Bernanke announced, in early November, the Fed's plan to buy an additional $75 billion in U.S. bonds each month for 8 months. What he said did not seem to be coinciding with the chart of the adjusted monetary base, which is the monetary measure that the Fed directly controls.
Finally, we can see that the Fed has done some major buying. The monetary base shot up in one week as reported last Thursday. The updates come out each week, usually on Thursday.
Now look at the one-year chart for excess reserves held by commercial banks:
Just as the monetary base turned up, so did the excess reserves held by banks. this means that, at least so far, most of the money being created by the Fed is going into the banks and not being lent out. This means it could take longer for price inflation to show up. This new money is not being injected into the economy and the fractional reserve process is not multiplying the effects.
We will continue to watch these charts and see if there are any reversals. For right now, it seems that QE2 is finally showing up in the monetary base and it seems that it is going into excess reserves. Stay tuned.