This isn’t anything new, but this paper by the New York Fed roughly outlines how the Fed plans to deal with excess reserves remaining after the recession is over (ha):
http://www.newyorkfed.org/research/staff_reports/sr380.pdf
In short, they want to use the interest rate they pay on excess reserves to control the amount of money entering the economy. What sort of effects will this have on the credit markets, especially from a malinvestment point of view? I imagine that it would function as some sort of price floor, but I’m not sure what the exact effects would be.
Any input is appreciated.