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SCSUScholars:  Where does interest on reserves come from?

Hit & Run:  Even When I Thought it Was Stimulation, I Knew it Was the Banks All Along

Instapundit:  SUNNY THOUGHTS FROM ARNOLD KLING: “Everything the Fed has been doing over the past fifteen months m…

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"Everything Fed has been doing makes sense if you think of their goal as transferring wealth from taxpayers to banks." http://bit.ly/4nwSHm 14 days ago

RT @naval: "the Fed ... makes sense if you think of their goal as xfering wealth from taxpayers to banks" http://j.mp/25LlyS 14 days ago

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Where does interest on reserves come from?
SCSUScholars — The usually reliable Arnold Kling misses one, I think. [Y]esterday I was trying to teach the consequences of paying interest on reserves to my bright high school students. They got, correctly, that paying interest on reserves lowers the money multiplier (it makes banks want to hold more reserves, which lowers the amount of lending they do for a given supply of reserves from the Fed) and is therefore contractionary. But one student asked, "Doesn't paying interest on reserves increase the deficit, and isn't that expansionary?" My response was ...

Even When I Thought it Was Stimulation, I Knew it Was the Banks All Along
Hit & Run — ... Arnold Kling tries to explain recent Fed policy actions re: injecting reserves into the economy and simultaneously paying banks interest on reserves to high school students, and comes to a sobering conclusion: ...

SUNNY THOUGHTS FROM ARNOLD KLING: “Everything the Fed has been doing over the past fifteen months m…
Instapundit — ... SUNNY THOUGHTS FROM ARNOLD KLING: “Everything the Fed has been doing over the past fifteen months makes sense if you think of their goal as transferring wealth from taxpayers to banks. If you try to explain it as an attempt to implement an expansionary monetary policy, you won’t even get past my high school students.” ...