Fed Target is 5.25%-5.5% overnight rate is 5.3%.
A) Banks tell Fed how much extra money is there by putting it in overnight deposits for given target rate. B) Banks are forced to charge more then the target rate to loan the money out otherwise they would loan it to the Fed overnight.
The Fed is paying 80ish billion to keep the banking inside the gilded cage. Thus allowing it to have control over the money supply.
h/t fvaldes1
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