Paul, Paul, Paul

Krugman talking about the politics of rates: 

The Fed has, I’d argue, been swayed by banks’ interests — not by crude corruption, but by the fact of who they talk to all the time. But that influence hasn’t stopped the Fed and other central banks from pursuing policies that the banks really hate in an effort to pursue their primary job, which is stabilizing the economy. At most we’re talking about a tilt in policy.

Not quite.  If this were measure theory, that is dollars are indexing goods, then the member banks determine the yield curve space the currency banker needs, the size of the left bottom corner that belongs to currency variation..  Currency bankers, by being 'in the money'  select both term and rate, ex-post and the rate risk is shared by the currency banker.   If the member banks cannot keep their loan/deposit ratio within precision, the the currency banker re-prices loans and deposits, a sterilization