Earlier this season, Sir Robert Naylor, nationwide adviser on NHS property and estates, recommended that wasted NHS land and property (“estate”) should be selling to invest in essential backlog maintenance of existing buildings and deliver programs for a modern health service. His review concluded that around a supplementary £10bn was needed to repair hospital structures and replace essential medical equipment to improve patient treatment.
Wasted land could be used to provide land for a large number of affordable new homes, particularly for NHS staff. The government appears to support the review and the investment required. This is definitely not privatization or a “fire sale” but the reinvestment of wasted assets to boost patient care, stresses Naylor.
But Kailash Chand, a GP in Manchester, worries that services could be threatened and that public consultation is lacking. He casts question on this method of funding for what exactly are apparent shortfalls in medical budget and he’s worried about the longer-term strategy that ought to involve making maximum use of the NHS estates. An instant, short-term fix could verify costly over time, he says.
Using the fed funds rate as a target has its problems, for just two reasons. First, under its corridor system, the Fed didn’t intervene in the fed money market – it was typically intervening in the right away repo market. Essentially, the Fed varied the quantity of reports in order going to a fed funds target, without having to be able to start to see the actual fed money rate while it was intervening.
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You can see why that might not work so well. Further, given funds financing is unsecured, so in times of financial market turmoil, the fed funds market is polluted with risk. The Fed may be pegging the fed funds rate in such situations, but volatility in risk will cause volatility in safe interest rates.
Again, these problems can be resolved easily if the Fed were to target an overnight repo rate, as is done in a great many other countries. In Canada Here, the Bank of Canada has no nagging problem with the volatility of short-term interest levels, in operating its corridor system. Overall, the Fed is overly-focused on reserves, as though monetary policy implementation could be displayed satisfactorily in conditions of some static demand and supply analysis of the “market for reserves.” That’s very misleading. Any central bank or investment company has a lot of options in implementing a financial plan, but fundamentally there are two broad methods. Market interest rates can be targeted through variation in the central bank’s lending, or in its borrowing.
When the Fed was founded, the founders envisioned that the involvement would happen through financing, and that the main element instrument would be the discount rate – with potentially different discount rates for different Fed districts. Roughly, the ECB intervenes by lending to banking institutions in the Euro zone – it’s key policy rate is its refinancing rate (at least when it’s running a corridor rather than a floor). Before the financial crisis, the Fed intervened day-to-day by lending on the repo market. 40 billion, for the most part.