As I understand it, the Federal Reserve raises interest rates to loans that they make to banks when the economy is growing too quickly to prevent hyperinflation. They also have the ability to change the discount window as well, which I believe is the ratio of deposits to loanable money. Wouldn't it be wiser for the Fed to adjust the discount window and always keep interest rates low? That way, when the economy is too "hot", the banks wouldn't be able to loan a muchoney out, which would make them be choosier with their loans. In my mind that would put more of the financial responsibility on the banks.
Has the discount widndow been used in this way in the past?
Submitted July 04, 2018 at 06:29PM by morajic https://ift.tt/2zcAKBn
