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...pursuant to prior myths (), here's another misunderstanding debunked – most recently by the Fed itself (2021):
"the money multiplier...is anchored in an obsolete explanation of how the Fed operates and influences banks"
research.stlouisfed.org/publications/p…
...pursuant to prior myths (), here's another misunderstanding debunked – most recently by the Fed itself (2021):
"the money multiplier...is anchored in an obsolete explanation of how the Fed operates and influences banks"
research.stlouisfed.org/publications/p…
/2
...money multiplier obsoletion TLDR:
· (fractional) reserve rates were a thing until GFC 2008, and obsoletion redoubled during COVID 2020 when reserve requirements were suspended/lowered to zero
· since reserves are now abundant, POMOs and SOMAs can't influence FFR anymore
...money multiplier obsoletion TLDR:
· (fractional) reserve rates were a thing until GFC 2008, and obsoletion redoubled during COVID 2020 when reserve requirements were suspended/lowered to zero
· since reserves are now abundant, POMOs and SOMAs can't influence FFR anymore
