Floored How a Misguided Fed Ex
Selgin, George
Sold by World of Books (was SecondSale), Montgomery, IL, U.S.A.
AbeBooks Seller since 20 December 2007
Used - Soft cover
Condition: Used - Good
Ships within U.S.A.
Quantity: 3 available
Add to basketSold by World of Books (was SecondSale), Montgomery, IL, U.S.A.
AbeBooks Seller since 20 December 2007
Condition: Used - Good
Quantity: 3 available
Add to basketItem in good condition. Textbooks may not include supplemental items i.e. CDs, access codes etc.
Seller Inventory # 00105116881
In October 2008, as the U.S. economy plunged, the Federal Reserve began paying interest on banks’ reserve balances. The resulting switch to a “floor system” of monetary control, in which changes in the interest rate on reserves, rather than reserve creation or destruction, became the Fed’s chief tool for influencing economic activity, was to have far-reaching consequences—almost all of them regrettable.
Besides intensifying the downturn by causing banks to hoard reserves, the floor system all but destroyed the market for unsecured interbank loans that had been banks’ ordinary “first resort” source of last-minute liquidity. By depriving the Fed’s asset purchases of the ability to stimulate investment and spending, it also compelled the Fed to compensate by purchasing assets on an unprecedented scale. All of this resulted in a substantial increase in the Fed’s role in allocating scarce credit. Finally, by severing the ordinary connection between the stance of monetary policy and the extent of the Fed’s asset holdings, the floor system risks turning the Fed’s balance sheet into a fiscal-policy playground.
Floored! offers a matchless account of our post-crisis monetary system’s history and shortcomings.
"Floored! gives an extraordinarily clear exposition of how the Fed sets the policy interest rate on excess reserves. It thereby reveals the monetary distortions caused by circumventing the market. George Selgin's advices should be read carefully by the Fed and followed." —John B. Taylor, Stanford University
"Following the Great Recession, most Central Banks created money hugely; yet inflation remained below target. In this important book, George Selgin explains how the short-term experiment of paying interest on bank reserves had the unintended consequence of completely breaking the link between Central Bank policies and the growth of the broader monetary aggregates—and throws much needed light upon a largely misunderstood aspect of recent monetary policies." —Charles Goodhart, London School of Economics
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