Here is an article that talks about the relationship and current levels of bank reserves, lending and money supply.

For those not interested in gold read down only to where it starts talking about the relationship to gold. Takes about three minutes reading or less.

Is this an indicator we are starting to see price inflation to perk up? Is the Fed about to get in a tight spot with artificially low rates? Don't know but maybe we need to get the popcorn.

It has been said that the Fed has been pushing on a string. That the expansion has all went to bank reserves and not shown up in circulation, therefore no additional money chasing the same amount of goods so therefore no price inflation. Is that about to change? I don't know, but it is worth watching.

The value of our currency ultimately affects what we receive for our crops. The value is a complex issue also involving other competing currencies. But to ignore the valuation of the currency ignores the denominator in our pricing.

Fiat money expansion

John

Edit: If you are not familiar with how most of our fiat currency is created the article may be confusing. Just remember that loans create deposits rather than the more traditional way that we think banks work ie. that peoples deposits are loaned out. That is why money supply increases as bank lending increases. Deposits grow as loan amounts grow. Thus the following statement in the article:

"we can confirm that both customer deposits and bank lending are accelerating above recently established trends."

It is the additional lending that creates the increased deposits. Not at all how most people think it works.

Second edit: in reference to the article, LIBOR interest rate has been rising, in case you have not noticed. If you have any variable rate loans based on LIBOR, you likely have noticed.