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What if the ER/D (Excess Reserves/Deposits ratio) is counter-cyclical, meaning that it goes down when...

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Finance

What if the ER/D (Excess Reserves/Deposits ratio) is counter-cyclical, meaning that it goes down when the business cycle is expanding, and it goes up when the business cycle is contracting? Why might this be true? (And in fact, it is true!) How would this affect the business cycle itself? Is this a problem inherent to capitalism? What can the Fed do about it?

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