IOER was going to change that. This would give the FOMC freedom to do whatever it wanted on the asset side – to expand as it might become necessary given the gravity of the situation – all while still keeping EFF in line with the monetary target “without compromising monetary policy”…..There’s simply no way to reconcile a monetary panic with this absurd idea of too much money or liquidity. The level of bank reserves just don’t correlate to anything outside the immediate arena of bank reserves.
