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« Nimble Management in an Uncertain Economy | Main | Economic Forecast 2011-2012 »

November 03, 2010



Dr. Conerly,
"This will put many banks in the awkward position of earning less on their reserves than they pay." -- I've not heard this line of thought about the FDIC charges anywhere else. Many have argued that the interest rate the Fed is paying on reserves is keeping banks sitting on those excess reserves. I think the way your post reads, the FDIC charges make the IOR policy a moot point. Am I wrong?

Lance Van Wyk

Thank you for an informative article. My question would be whether the "man in the street" saw the benefits of QE1? Did we understand the true impacts it will have and are we not seeing an economic meltdown happening before our eyes with QE2? By reducing the exchange rate of the dollar, there is a real risk of trade retaliation tactics by other countries which could have other consequences for banks and the population at large.

Quantitative easing

QE2 does not have the same objective as QE1. QE1 was to prevent a banking collapse, which it did. The purpose of QE2 is to prevent the start of a deflationary spiral, raise asset prices, lower the value of the dollar,etc.

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