In my description of the financial meltdown of 2008, I examine how Fed’s statements on monetary policy tend to be unreliable. Prior to the collapse in financial markets, the Fed spent four years reducing bank reserves. All the while the Fed insisted it had a highly expansive monetary policy.
On specific occasions, Bernanke noted the Fed was increasing its purchases of securities by tens or even hundreds of billions of dollars. During those periods, bank reserves often declined.
The mismatch between what the Fed says and what it does means it’s important to focus on what the Fed does, not what it says. During the period following the financial collapse, monetary policy was not as expansive as many have suggested. This is one reason current dollar spending has remained subdued.