I do not understand some of what L. Randall Wray is talking about in the video below.
The Fed Funds Rate, the overnight rate, the interbank rate, is not a floating rate that goes up or down in accordance with reserves. It is an arbitrary rate set by the Fed that stays fixed whether the reserves increase or decrease until the Fed changes that rate.
I don't know what he means by "hit the rate." The rate has been near zero bound with the reserves going through the roof because the Fed is paying interest on excess reserves. Can someone explain to me what he means that I'm missing? I don't understand because he then talks about open-market operations as if those are setting the overnight rate. We have known a long time that open-market operations are monetarism, haven't we? He says the government is the issuer of the money (via "its" central bank, the Fed), but it does pay interest on it to bond holders. So, it's inherently inflationary in the supply sense, right?
Ah, then he answers my question by differentiating between the different rates. So, he's not crazy or ignorant after all.
Then he leaves room for the private sector just because you have to, he says. However, you don't have to. He's wrong.
L. Randall Wray then goes on about an employment program that won't set off a wage-price spiral (inflation) as if there is no better way. There is a better way. The NEED Act with modifications is vastly better because the Monetary Authority doesn't control inflation on the backs of the unemployed. That's if it is done correctly.
He spoke as if government spending is the inflationary pressure when it is rising demand that allows rising prices that is the real pressure, and that can happen without the government hiring a soul.
Here's the video:
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