Williams details rapid liquidity drain: ON RRP fell from $200 billion to near zero, reserves dropped $350 billion.
“Between early July and mid-September—when the TGA reached around $800 billion—the ON RRP fell from a balance of about $200 billion to de minimis levels, and reserves fell by $350 billion.”
Williams argues historical scholarship shows monetary policy extends beyond short-term rates to broader liquidity and longer-term rates.
“However, this narrow understanding of monetary policy is alien to the history of monetary economics and central bank practice.”