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BaselBore's avatar

Thanks for the article. I mostly agree, but the leverage ratio is a problem here. Unless reserves are exempt from the leverage ratio, the FED choosing to increase reserves also means it requires that leverage-ratio-bound banks increase capital or decrease their leverage ratio exposure measure in other ways - and don't forget that the LREM feeds into the G-SIB charge. This in turn creates an issue for the transmission of monetary policy, as even Carolyn Rogers has acknowledged. If the simple model that increasing reserves increases bank assets and liabilities with no increase in capital worked, we'd be good. Hence it's a shame that the FED's temporary change to exempt reserves from the SLR in wasn't made permanent.

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georgist's avatar

If QE worked why do I have to work twice as long to buy a home?

What econ labels growth means lower living standards for the plebs.

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