Milton Friedman, optimum quantity of money, interest on excess reserves, interest on reserves, monetary base

Fed economists defending interest on reserves have recently called on an unexpected quarter by reviving interest in Milton Friedman’s 1969 essay, “The Optimum Quantity of Money.”[1] As Ben Bernanke and Don Kohn put it, “Before the Fed paid interest on reserves, banks engaged in wasteful and inefficient…

monetary base, money supply, Open Market Operations, repos, reverse repos

In previous installments of this primer I've tried to convince you, first, that monetary policy is ultimately about keeping the available quantity of money from differing substantially, if only temporarily, from the quantity demanded and, second, that doing this boils down in practice to having a money…