tag:blogger.com,1999:blog-5713178645208582139.post6602329351699782890..comments2024-03-17T03:26:42.785-05:00Comments on Macro Musings Blog: The Other Side of the Fed's Balance SheetDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5713178645208582139.post-83692779524654929882017-10-30T21:01:32.379-05:002017-10-30T21:01:32.379-05:00Great post!Great post!BJHnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-29393931961798828432017-10-23T09:18:40.889-05:002017-10-23T09:18:40.889-05:00Interest is the price of loan-funds (the market...Interest is the price of loan-funds (the market's bailiwick). The price of money is the reciprocal of the price-level (the Fed's bailiwick). <br /><br />See: Dr. Daniel L. Thornton, Vice President and Economic Adviser: Research Division, Federal Reserve Bank of St. Louis, Working Paper Series, “Monetary Policy: Why Money Matters and Interest Rates Don’t”<br /><br />http://bit.ly/1OJ9jhU<Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-16787555132625931392017-10-23T08:37:42.692-05:002017-10-23T08:37:42.692-05:00The money stock (& DFI credit, where: loans + ...The money stock (& DFI credit, where: loans + investments = deposits), can never be managed by any attempt to control the cost of credit [or thru a series of temporary stair stepping or cascading pegging of policy rates on “eligible collateral”; or thru "spreads", "floors", "ceilings", "corridors", "brackets", IOeR, etc.]. <br /><br />Using a Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-68221040794799545002017-10-23T08:33:53.204-05:002017-10-23T08:33:53.204-05:00The DFIs once became unconstrained by the volume o...The DFIs once became unconstrained by the volume of legal reserves c. 1995. In 1990/1991 the Fed reduced reserve requirements by 40 percent and then thru reserve avoidance, sweep accounts further reduced reservable liabilities (transaction based accounts).<br /><br />See: “Are U.S. Reserve Requirements Still Binding?”<br /><br />http://nyfed.org/2yv1ziW<br /><br />But this trend has reversed Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-84496852853505320192017-10-23T06:05:58.686-05:002017-10-23T06:05:58.686-05:00"What it should do, in my view, is aim to bri..."What it should do, in my view, is aim to bring the IOER closer to market interest rates." <br /><br />Isn't that getting the causality wrong? Looking at e.g. your second chart (IOER, overnight Dollar Libor, 1 Month treasury yield) I get the distinct impression that IOER (or alternatively Fed Funds Target) is the anchor relative to which other market rates are priced. In other wordsjawhttps://www.blogger.com/profile/06345541029218867611noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-61909117023564050782017-10-22T08:30:03.206-05:002017-10-22T08:30:03.206-05:00The essence of our managed-currency system, is a s...The essence of our managed-currency system, is a system in which the volume of currency in circulation is impersonally determined by the total effective demands of the public or the amount which meets most closely the needs of trade.. The basic process by which currency is put into and taken out of circulation is through the banking system. The volume of currency held by the public needs no Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-38924590926782888322017-10-22T08:27:47.335-05:002017-10-22T08:27:47.335-05:00The error is in the Fed's definition of the mo...The error is in the Fed's definition of the money stock. It is inaccurate (for the cataloguer of economic statistics) to exclude the Treasury’s General Fund Account from the assets included in M1 (with the exception of WWII). No one has established any unique price effect of federal outlays, as compared to state and local government outlays, or expenditures by the private sector. Of courseSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.com