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"Somewhere in this space is why we have come to accept the importance of an independent central bank. Indeed, this is a concern should the Fed need to pay interest on reserves that exceed the interest earned on its bond portfolio. Then the Fed would need to turn to the Treasury and say "Remember when we paid you $89 billion? Well, we need some of that back now."
I dont think that would ever happen... at least the Fed would NEVER let that happen where they would get themselves in the position to have to go to Congress for an appropriation to pay IOR. NEVER going to happen.
If they reverse course and start to raise rates, if they work down the portfolio correctly (and I'm sure they will) this will never happen.
Their portfolio yields well in excess of what is required to pay IOR...
In fact I would submit that they would easily subordinate policy to achieve this effect if necessary.
3 comments:
What Tom said.
BOG=bank of government?
tjfxh=Thomas Johannes Francis Xavier Hickey?
"Somewhere in this space is why we have come to accept the importance of an independent central bank. Indeed, this is a concern should the Fed need to pay interest on reserves that exceed the interest earned on its bond portfolio. Then the Fed would need to turn to the Treasury and say "Remember when we paid you $89 billion? Well, we need some of that back now."
I dont think that would ever happen... at least the Fed would NEVER let that happen where they would get themselves in the position to have to go to Congress for an appropriation to pay IOR. NEVER going to happen.
If they reverse course and start to raise rates, if they work down the portfolio correctly (and I'm sure they will) this will never happen.
Their portfolio yields well in excess of what is required to pay IOR...
In fact I would submit that they would easily subordinate policy to achieve this effect if necessary.
BOG=bank of government?
Board of Governors, of which BB is the Chair
tjfxh=Thomas Johannes Francis Xavier Hickey?
James
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