Melonius [he/him]

so here the Federal Reserve can sell government-backed securities (US treasuries) at a specific rate (say 2%) to set the minimum price of borrowing

It’s my understanding that treasury rates are set at auction, so these rates can be driven by demand (and not just internally as bidding is done by outside governments). The easier way to affect interbank lending is through interest on excess reserves - https://www.federalreserve.gov/monetarypolicy/reserve-balances.htm

This very transparently sets a floor while discount window rates sets the cap on interbank lending, and of course feeds back in to the treasury auction results as banks will allocate excess reserves to treasuries if they are paying substantially more than the interbank/fed IOER rates

I looked away for 10 seconds today and couldn’t find them despite calling their name. Had to bluff and say ok I’m looking somewhere else before they came out screaming “nonono!”

This is amazing quality