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The St. Louis Monetary Base:

Last Release: Tuesday, May 15
Released by Federal Reserve Board

The most recent number of 8% reflects actions by the Federal Reserve to bring the monetary base down to more normal levels.  The largest ever recorded in the history of the St. Louis Base was a spike that occurred near the end of 1999, where the monetary base jumped over 16%.  This large increase can be attributed to Y2K fears.  The Federal Reserve knew that should there be a Y2K crisis, there could be a run on the banks.  This facilitated the need to increase the amount of cash in hand held by banks.  Interestingly enough, the Fed managed to do this relatively quietly, in an effort to avoid problems, and their ideas were well summarized in that the best way to prepare for Y2K was to do nothing.  Greenspan’s “the safest place for your money is where it is.”

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