Jeremy Siegel Backs Ted Cruz's Plan To End Fed Interest Payments On 'Excess Reserves,' Potentially Saving $2 Trillion In Deficits: 'Not A Trivial Concern'

Jeremy Siegel supports Sen. Ted Cruz's proposal to end interest payments on excess reserves by the Federal Reserve, potentially saving $2 trillion in federal deficits over the next decade. Siegel argues that the Fed's current operating framework has shifted from profit-contributing to deficit-expanding, warranting scrutiny. However, JPMorgan strategists caution that abolishing these payments could disrupt bank liquidity management and complicate monetary policy, leading to higher costs for banks. The Fed began paying interest on reserves in 2008, a move that has significant implications for financial markets.