The floor system is screwed, it offers an interest on reserves higher than the market rate for short term reserves. And further, the Fed floor system is not a corridor.
One problem, if the IOER rate is too high (yes), then why has Congress not piled on the deposits and taken advantage? The ultimate question, Treasury (and Congress) do not act to take advantage, and that is the problem.
Ultimately the Fed is concerned with its primary objective, keep government funded so it won't shut down. George is unable to make that argument least he be ostracized for political incorrectness. Once we understand the fiscal issue then the Fed contradictions make sense.
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