Macro Lit Review 4: Highlights from Mid-2023 with George Selgin
Macro Musings with David Beckworth
00:00
The Importance of a Permanent Floor System
The Fed's post-2008 operating system is known as a floor system. It floods the banking system with reserves and encourages banks to maintain high levels of real reserve balances by paying interest on reserves. All kinds of rationales were given for making it permanent, claiming that it would keep banks liquid. Every one of those complaints has been shown to be false. The system has not proven easy to operate. And the cost has been immense.
Transcript
Play full episode
