Reply To: Increasing interest rates on excess reserves (IOER)


“Tiger by the Tail” was the title of a book by Hayek in which he argued that a central bank can seem in control of the boom, inflating the money supply and lowering interest rates, but there comes a point at which it is stuck with unattractive policy options: should it continue to inflate and risk price inflation or moderate monetary inflation and risk further slowdown in the economy. The central bank loses control and becomes the prey, not the predator.