Thinking in Markets

S1E31 - Why the Fed Cannot Shrink Reserves Blindly


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Michelle and Vox unpack a part of Fed policy that sounds technical but matters a lot in practice: why the central bank cannot safely reduce reserves unless banks also need fewer of them. By the end, listeners will understand reserve demand, why banks still want reserves even when they prefer profits, and why this is different from liquidity in capital markets.

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Thinking in MarketsBy Vox