/1
...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
/3
...money multiplier myths (cont'd):
· in the Fed's modern "ample-reserves regime... IORB serves as a reservation rate, and affects market interest rates [via arb]...influences banks' decisionmaking about setting deposit and loan rates...lending and investment"
#ioer #iorr
...previously:
...that was quick:
"SBF [bailing out crypto rn e.g. Blockfi and Voyager Digital] is basically cosplaying JP Morgan in the Panic of 1907"
#FTX
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.