One Bank Handout the Fed Should Keep Giving

Some policymakers at the Fed want to lower the interest paid on bank reserves. That would be a bad idea

Many people who should know better have been confused by the Federal Reserve's decision to pay 0.25 percent in annual interest on reserves held on deposit by member banks. Robert Hall, a senior professor at Stanford, for example, argues that "an expansion of reserves contracts the economy" when the Fed pays interest on reserves.

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