Wednesday, March 17, 2010

Thank you for what, exactly?

Before you join Pete Davis, Brad DeLong, and Robert Waldmann in thanking Marjorie Margolies-Mezvinsky, look at this chart.

Now, go and read L. Randall Wray, Marshall Auerback, Paul Krugman, Dean Baker, Paul Krugman, and Brad Setser. Update, read billy blog, too.



  1. Some days I just want to shout, "Can't you see?!?"

    If we weren't paying banks to lend to the Fed instead of their customers -- "interest on reserve balances," since October 2008: -- then there would be more actual borrowing and not a trillion dollars which used to be commercial paper sitting on the Fed's balance sheets.

  2. Hi James,

    To be sure, the IOR policy acts as a backstop for the flow of reserves into the more general economy. However, I do noto beleive that this is true during a major financial crisis. Bank lending would have been just as tight had the IOR policy not been in place, in my view.



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