No, the Fed hasn’t lost control of overnight rates. Zoltan Pozsar is wrong.

Note: This post first appeared on Patreon on 31 May 2018

This post is a direct response to the politics masquerading as economics embedded in a Bloomberg post about the Fed's interest on excess reserves (IOER). The Bloomberg post is based on the analysis of Credit Suisse analyst Zoltan Pozsar, a former U.S. Treasury adviser.

And the gist of his analysis is encapsulated in the Bloomberg headline, "As Fed Loses Control of Overnight Rates, Blame Shifts to T-Bills". The analysis is all wrong. And ...


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