John Hussman discussed this years ago: http://www.hussmanfunds.com/wmc/wmc101025.htm
There are meaningful differences between currency, reserve balances, and short Treasuries, and they are reflected in the prices (rates) at which they trade. US Treasuries, especially Bills, are a...
Luis, OK, I'll clarify. The floor system has been "de facto" adopted by the Fed because of excess liquidity due to QE, very low interest rates and near-perfect substitutability of money and gover...
Steve, Thank you for not just thumbing your nose at the divide with glee, and for remembering that bridges are not the kind of (induced) complexity that brings systems down in the long run. And m...
@jck, interesting fact, thanks. Why do the banks prefer to use vault cash though, which does not bear interest either?
@RebelEconomist: The Fed had a long running problem with banks meeting the bulk of their required reserve requirements with applied vault cash, this resulting in very low balance in their account...
Sorry, read paragraph 20 too.
@Andy Harless, "Why, first of all, do central banks think it’s a good idea to pay interest on reserves?" In the BoE's case, it was about raising the elasticity of demand for reserves, and hence...
Here's another way to think about it. Why, first of all, do central banks think it's a good idea to pay interest on reserves? What is the function of IOR? Essentially, I would argue, the central ...
France's, Well, one of us is lost. our host describes the floor system as a choice, returning to the channel or corridor system being an alternative choice. He's saying when the economy improves ...