BONUS: George Selgin on the Fed Taper and Shrinking the Fed’s Balance Sheet
Macro Musings with David Beckworth
00:00
Why a Corridor Operating System Is Better Than What We Have
In a floor system, you can have cee infinity at any time as long as you are able to control the lower end of strats. In a corridor system, in contrast, because the s rate on reserves itself is the low end and intends to go to zero in a crisis, it's only when interest rates are at zero that c is practical. Because a corridor system turns into a floor system at that point, otherwise reserves pay less than the target overnight rate. At all other times, large acid purchases aren't feasible because they mean you can't maintain your positive target rate. So the bottom line here is that the danger of abuse of c e for non maker economic purposes isn't
Transcript
Play full episode
