Why are we even doing the dance that banks need to keep short term assets on hand to satisfy deposit outflow? Can't they just buy whatever government bonds they want (if the federal government defaults and does not honor its debt there are bigger issues than some regional bank) and give them to the Fed in exchange for freshly minted money?
It's the end result in either case, but a lot of uncertainty and friction is added for some reason. Why?
It's the end result in either case, but a lot of uncertainty and friction is added for some reason. Why?