An alternative interpretation of Fed policy is that it is either a nasty political payoff to banks or a desperation move to hide banking-sector insolvency: the Fed bought MBS likely above their marked-down value and pays interest on reserves, which subsidizes banks by encouraging them to park money at the Fed.
causalpending
Speaker
Russ RobertsEvidence Quote
“the Fed continues today to pay a quarter of a percent of interest on reserves which is a historically unprecedented I think policy which encourages banks to keep their money at the Fed and just receive that nice flow which is a subsidy from me to them”
Created: 6/15/2026, 9:17:28 AM
My Notes
Loading notes...