Stop paying interest on excess bank reserves
What the document says“Stop paying interest on excess reserves.”
The chapter describes the policy, begun during the 2008 crisis, as the central bank effectively printing money and borrowing it back from banks rather than banks lending it to the public, calls it a transfer to Wall Street at the expense of the public, and notes excess reserves have reached $3.1 trillion, up seventyfold since 2007. It asks that Congress bring back the pre-2008 system founded on open-market operations, which it says minimizes the power to allocate credit preferentially.
What the document actually says“Stop paying interest on excess reserves.”
The Fed pays banks to leave money with it. That should stop.
Banks park spare money at the Fed. The Fed pays them interest on it. The book says that money should be lent out instead.
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