The Fed’s Monetary Puzzle Palace—The Utter Foolishness of Interest Rate Targeting

During 2018 the Fed paid out the incredible sum of $43.1 billion to pretend that it was fixing the overnight funds rate. That’s right. Banks got $38.5 billion in IOER payments (interest on excess reserves) for keeping roughly $1.5 trillion of excess reserves on deposit with the Fed. For the last four years together, the IOER hand-out totaled […]