"This is an idea that's long overdue," says Rajiv Sethi. "Allowing individuals to hold accounts at the Fed would result in a payments system that is insulated from banking crises."
Sethi lists several features of such a system, features I'm quite sure you like. "But the greatest benefit of such a policy would lie elsewhere," he says, "in providing the Fed with a vastly superior monetary transmission mechanism." He writes:
Any profits accruing to the Fed as a result of its open market operations could then be used to credit these accounts instead of being transferred to the Treasury.
"It's helicopter money," says Nick Rowe in comments.
"That's exactly what it is Nick," Rajiv Sethi says....
"The main advantage of such an approach is that it directly eases debtor balance sheets," Sethi says. "In contrast, monetary policy as currently practiced targets creditor balance sheets."The New Arthurian Economics
Rajiv Sethi: The Payments System and Monetary Transmission
The Arthurian
