tag:blogger.com,1999:blog-7707793736288462113.post5733225770790963014..comments2024-03-15T03:27:49.084-04:00Comments on Bubbles and Busts: "Interest-On-Reserves Regime" Will Rule Monetary Policy For The Foreseeable FutureAnonymoushttp://www.blogger.com/profile/00720722626969395929noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7707793736288462113.post-74498840825555882612012-09-17T05:01:22.450-04:002012-09-17T05:01:22.450-04:00Money supply continue to rise plus the monetary po...Money supply continue to rise plus the monetary policy which hasten the destruction of US dollar would actually cause economic downfall. Please read <a href="http://www.facebook.com/ebutowskypub" rel="nofollow">Ed Butowsky</a> post, <a href="http://www.foxbusiness.com/investing/2012/09/10/obama-chose-monetary-policy-and-youre-feeling-it/" rel="nofollow">"Obama Chose Monetary Policy - And You're Feeling It"</a>.Anonymoushttps://www.blogger.com/profile/02593247850024366654noreply@blogger.comtag:blogger.com,1999:blog-7707793736288462113.post-35991848088700176142012-08-23T14:54:34.963-04:002012-08-23T14:54:34.963-04:00How does IOER "absorbs existing bank deposits...How does IOER "absorbs existing bank deposits within the CB system"? Wouldn't the interest simply be paid out in reserves? In that case, IOER actually adds further reserves to the system. <br /><br />I agree with you that IOER reduces the incentive for banks to trade reserves and therefore removes a form of intermediation within the financial system. In effect, the Fed is taking over the role played by shadow banks. Removing IOER, however, would result in an effective FF rate of 0 and probably eliminate money market funds.<br /><br />I don't think the policy of IOER does much to help the extension of credit, but I'm not convinced that's the point. IOER is set up to capitalize the banks and provide a future means to controlling short-term rates without having to remove a massive quantity of reserves from the system.<br /><br />Anonymoushttps://www.blogger.com/profile/00720722626969395929noreply@blogger.comtag:blogger.com,1999:blog-7707793736288462113.post-3904672708366529912012-08-17T12:23:42.604-04:002012-08-17T12:23:42.604-04:00The payment of interest on excess reserve balances...The payment of interest on excess reserve balances both: 1. absorbs existing bank deposits within the CB system acting as a credit control device & 2. attracts monetary savings from the shadow banks (induces dis-intermediation within the non-banks in 2 different ways). IOeR's set up a "collateral squeeze" & reduce the “velocity of pledged collateral”. <br /><br />“The chains of loaned securities being pledged and re-pledged in the so-called wholesale money markets are growing shorter, as collateral piles up at central banks where it can’t generate additional borrowing.”<br /><br />IOeR’s alter the construction of a normal yield curve, IOeR’s INVERT the short-end segment of the YIELD CURVE – known as the money market. Excess reserve balances remunerated at .25% are covered by all "close substitutes' extending for up to 2 years under the Daily Treasury Yield Curve's umbrella.<br /><br />IOeR's result in a cessation of the circuit income & transactions velocity of funds. IOeR's exacerbate stagflation. Salmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.com