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The Fed's fed funds target isn't about funds, it's about the Fed and it shouldn't be.

Eurodollar University

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I-O-E-R Is the Point of Financial Restraint

I-O-E-R influences credit behavior because you have a choice. You can lend into the real economy at whatever interest rate or you can just park funds, leave your reserves on with the Fed and get I-O-e-R. Regardless of the level of interest rates, banks were already being restrictive. It had nothing to do with theFed and had everything to do with what happened in 2008.

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