reserves can LEAD to higher M2 to the extent that the reserves are used to buy assets from non-primary dealers
So, Fed buys T-Bills from PDs, increasing their reserves. Then PDs buy assets with their higher reserves from non primary dealers? What kind of assets show up in M2?
They could just optimize their pension saving process to stimulate economic growth. See below. http://morganisteconomics.blogspot.com/2019/03/pension-pumping.html?q=pension+pumping http://morganisteconomics.blogspot.com/2019/03/optimal-pension-saving.html?q=optimal+pension+saving
It may be more like Qualitative Easing rather than Quantitative Easing depending on how they do it. They did something like this before called 'Operation Twist' if it is the case of buying or selling certain types of treasury bonds. In the case of 'Operation Twist' it was in relation to the longevity of the bonds, they bought long term treasuy bonds and sold short term treasury bonds.
"Currency and money in checking accounts (demand deposits). Traveler's checks are also a component of M1, but are declining in use. M2 includes all of M1, plus savings deposits, time deposits like certificates of deposit, and money market funds." To the extent that these non-PD put their funds in these assets, it will show up there. Not all the reserves will become M2 but some will
Hmmm… any data to support this? Not sure what assets PDs would be buying from other banks when the PDs themselves are stuffed to the gills with Treasuries.