Beckworth noting that the Fed rules seem to be different.
It is the IOER, but more precisely, the balance between excess reserves and treasuries held. The relative balance is acting like a kind of corridor target with member banks varying their excess reserves according to the state of the treasury curve.
George Selgin is not happy, but I am sanguine. It is a better system. George would say it is half baked, and Bernanke would likely agree. I think Ben was thinking corridor system when he began this IOER, but he never got all the way. The Fed has legal bindings they cannot avoid and Congress is fairly ignorant; so we have a half baked system.
No comments:
Post a Comment