Inside the Fed's Balance Sheet
A video and podcast interview with Darrell Duffie, based on his excellent recent article. Click here to watch/listen via Hoover’s Freedom Frequency series.
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A video and podcast interview with Darrell Duffie, based on his excellent recent article. Click here to watch/listen via Hoover’s Freedom Frequency series.
Let me get this straight. The upside of abundant reserves is that there cannot be a run on the Fed and the downsides are the evisceration of the interbank market and the ratcheting up of the minimum reserve level, not to mention the proliferation of new facilities the Fed has been forced to provide to keep the overnight rate close to the interest rate on reserves. Also, you state that abundant reserves satisfies the conditions for the optimal quantity of money or, as you say, liquidity. But that’s only true if you ignore currency, which is nearly as large as reserves, $2.4 trillion vs. $2.9 trillion.
https://substack.com/@permabear/note/c-251957678?r=6018t6&utm_medium=ios&utm_source=notes-share-action
I did a brief note on the Fed’s balance sheet. Let me know if I got anything wrong.