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US: Abundant reserves enabled a soft landing
From scottgrannis.blogspot.com
In the Old Days (pre-2009), when bank reserves paid no interest—they were considered a "dead" asset—banks held the minimum amount of reserves necessary to collateralize their deposits. When the Fed needed to bring inflation down (usually as the result of a prior mistake that allowed inflation to rise), the Fed restricted the supply of reserves in order to force their price (the cost of borrowing reserves) higher, and to slow the growth of the money supply and bank lending. Higher interest rates and a scarcity of money eventually did the job, but unfortunately, a recession typically followed, heralded by sharply ... (full story)
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- Posted: Nov 3, 2024 7:00am
- Submitted by:Category: Fundamental AnalysisComments: 0 / Views: 4,374
