Sunday, July 3, 2011

A Compelling Dosey-Doe | Time to move the burden from the taxpayer to the culprit

Interesting concept... from last week's Business Week:

"Blinder thinks the Fed is being "a little too passive."
 
He wants the Fed to cut to zero the rate it pays banks on the excess reserves it holds for them. That would remove banks' incentive to park money with the Fed. Even better, says Blinder, the Fed could effectively charge banks for holding their reserves by paying a negative interest rate. 

 More likely is that Bernanke will keep short-term interest rates, now around 0.25 percent, at that low level for even longer. "It is becoming increasingly likely that the Fed will be on hold until 2013," says Perli. 

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