A point I have made many times. View the Fd as a market maker for price discovery. It has to share risk, so it has a bounded reserve function, observable. That reserve function is the tradebook uncertainty.
What trade book? Net out the flows that cancel, resolve it to a loan to deposit flow. Tradebook that flow. What has the Fed netted? Its own cost, it is telling us the median cost of one of the 20 TBTF banks, the size and inertia needed to regulate them. The Fed is competing in the hedge fund business, it has the median expense if the 20 large. A valuable counter weight, and one that will stick around, in the sandbox.
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