Excess Reserves

By | July 14, 2019

This is a “thing” that came out of the 2008 crisis. There are plenty of sources that describe it and talk about it, as shown in the references below. But, you have to have know about it to find it of course.

The important issue here is that the Interest Paid on Access reserve is proportional to the federal fund rate.  And that the “interest” on the access helps delay the inflation that could be cause by all the access cash the FEDs created to start with.

Ref:
1 – The Fed and the U.S. National Debt
2 – United States Treasury security
3 – Treasury Auctions – Federal Reserve Bank of New York.

 

 

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