, 6 tweets, 2 min read
My Authors
Read all threads
The discount window is such an important part of monetary policy and gets far too little written about it. People think it's obscure and irrelevant now but today it's like a blackhole- it's absence is felt through the effects of its absence. 1/N
One of the most important part of Bill Nelson's interview on @DavidBeckworth's podcast was when he discussed how the traditional aversion to the discount window has been heightened 1000 fold since the bailouts. Executive level officials believe they'll be fired for it. 2/N
With aversion so extreme, it's impossible to quantity limit non-borrowed settlement balances. With no aversion at all, the level of non-borrowed settlement balances wouldn't matter. It was only in the mid-20th system with mild aversion that they did matter. 3/N
Settlement balances were never quantity limited, but in the 1950s (post accord) you could quantity limit non-borrowed settlement balances and have banks either adjust to avoid the conditional direct credit regulations of the discount window or just be subject ot the 4/N
The other important piece here is of course that the 1950s and 1960s had a complex matrix of tools where the indirect tools (reserve requirements and open market operations) relied on the direct tools to be effective. We need to go back and learn from Robert Roosa et al. 5/N
Understanding their system and the credit availability doctrine is critical to redesigning monetary policy from the ground up 6/6
Missing some Tweet in this thread? You can try to force a refresh.

Enjoying this thread?

Keep Current with Nathan Tankus

Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!