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I'm glad you raised questions about that video, Peter. Of course it is meant to be a basic educational video, so we can't expect too much. Still, I wonder how many viewers, listening to Tyler explain how interest on reserves has been used to tighten money since December 2015, will realized that it must also have served that same purpose when it was introduced in October 2008. That is, how many will realize that the Fed came up with a new means for tightening policy just when they ought to have been endeavoring to loose it! There is much more that is awkwardly glossed over--like the fact that IOER came before QE, and that it was in fact the proximate cause of the hoarding of reserves that made QE "necessary." Fed officials have misrepresented the chronology in order to gloss over their errors. But others should have no inclination to do the same.

I'm glad you raised questions about that video, Peter. Of course it is meant to be a basic educational video, so we can't expect too much. Still, I wonder how many viewers, listening to Tyler explain how interest on reserves has been used to tighten money since December 2015, will realized that it must also have served that same purpose when it was introduced in October 2008. That is, how many will realize that the Fed came up with a new means for tightening policy just when they ought to have been endeavoring to loose it! There is much more that is awkwardly glossed over--like the fact that IOER came before QE, and that it was in fact the proximate cause of the hoarding of reserves that made QE "necessary." Fed officials have misrepresented the chronology in order to gloss over their errors. But others should have no inclination to do the same.

By the way, Money: Free and Unfree has nothing in it about these issuers. (Please plug it anyway!). My writings on that are mostly on Alt-M, though I also have a book coming on the subject, called "Floored!"

George, Excellent points! But isn't it possible that our recovery has been longer, though sluggish, because of IOER? As Hayek said, we can get a quick recovery with loose monetary policy but it will shorten the length of the expansion.

Roger, I think you are confused here in two respects. First, as I state above, IOER is a _tightening_ device, not a loosening one. Second, the recovery wasn't slow because money was too loose; it was slow because it was too tight. (Whether monetary policy was too loose before 2008 is another matter.) The "Austrian" tendency to view all cyclical problems through a "money is too loose" lens seems to be at play here. In truth, central banks are capable of erring in either of two directions.

Seriously, George, what <<"Austrian" tendency to view all cyclical problems through a "money is too loose" lens>>? That is certainly not what *I* said in my 2014 monograph "From Crisis to Confidence." It's certainly not a "Hayekian" view, etc. So what "Austrians" are we talking about here?

Though the list is long, I should have noted Steve Horwitz's 2000 book, Microfoundations and Macroeconomics: An Austrian Perspective. The list goes on . . .

Roger, the % of self-styled Austrians who take the position you and Steve take is miniscule; and it is darn small even if one considers only academics. The commentator I answered is representative of the vast majority. So, by the way, was Mises. Hayek was better, in his theory, but not so much in his practical actions and policy recommendations of the 1930s. In short, I'm confident that my generalization--it can't reasonably be regarded as anything more than that--is valid.

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