Elon Musk and Vivek Ramaswamy are right to spotlight excessive spending at the Federal Reserve, but their focus on the $5 billion annual cost of the system’s 24,500 employees misses the principal opportunity for savings. The approximately $180 billion in interest on reserves the Fed pays annual offers a far greater potential cost reduction. Unlike the Treasury with its interest payments on the national debt, the Fed is under no contractual obligation to pay interest on reserves and could reduce these payments unilaterally and eliminate them with Congressional authorization.
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