The Importance of Reserves in the Fed's Operations

The level of reserves are useful only to a specific point. Once you get beyond that point, it doesn't matter how many reserves you have. It's what's another trillion reserves going to do that the first four didn't do before. When in actual operation, banks don't operate that way. The level of reserves is not the primary consideration in the behavior. But we're taught to believe that everything is about the Fed and everything about the Fed these days is the level of bank reserves.