George Selgin on the New Deal and the History of Banking Crises

Selgin argues the Fed's ample-reserves floor system has broken its own promises and may be operating outside its legal mandate.

• Floor system failures: Selgin says every promise made for the Fed's 2008 ample-reserves 'floor' system—working with a couple hundred billion in reserves, simplifying policy, saving staff—has failed to materialize, producing a 'Rube Goldberg contraption.'
• Legal violation claim: Selgin argues the Fed's interest-on-reserves rate has violated the 2006 authorizing legislation, which requires IOR at or below market rates for short-term risk-free funds, since October 2008.

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