New Investment Findings from Department of Research Outlined (How the Federal Reserve Got so Huge, and Why and How It Can Shrink): Investment

2024 SEP 27 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Data detailed on Investment have been presented. According to news originating from Washington, District of Columbia, by NewsRx editors, the research stated, “Following the collapse of Lehman Brothers in September 2008, the Federal Reserve underwent a significant shift in how it implemented monetary policy, transitioning to an excessive-reserves framework that it had deemed too radical and rejected just months prior. This shift involved borrowing excessive reserves from banks, deviating from its traditional method of borrowing only the amount banks needed to meet reserve requirements and address clearing needs.”

Financial support for this research came from Bank Policy Institute.

Our news journalists obtained a quote from the research from the Department of Research, “Despite initial intentions to revert to the necessary-reserves framework, subsequent developments, including three rounds of quantitative easing, led to the permanent adoption of the excessive-reserves approach in January 2019 by the Federal Open Market Committee (FOMC). This decision was a mistake. The framework has not yielded the purported benefits, such as simpler policy implementation, and has required the Fed to be vastly larger than originally anticipated.”

According to the news editors, the research concluded: “Advocates of the excessive-reserves approach argue it aligns with the Friedman rule, but alternatives like a voluntary-reserve-requirement regime could achieve similar outcomes without the drawbacks.”

This research has been peer-reviewed.

For more information on this research see: How the Federal Reserve Got so Huge, and Why and How It Can Shrink. Southern Economic Journal, 2024. Southern Economic Journal can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA.

The news correspondents report that additional information may be obtained from Bill Nelson, Bank Policy Inst, Dept. of Research, Washington, DC, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1002/soej.12732. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)