so here the Federal Reserve can sell government-backed securities (US treasuries) at a specific rate (say 2%) to set the minimum price of borrowing
It's my understanding that treasury rates are set at auction, so these rates can be driven by demand (and not just internally as bidding is done by outside governments). The easier way to affect interbank lending is through interest on excess reserves - https://www.federalreserve.gov/monetarypolicy/reserve-balances.htm
This very transparently sets a floor while discount window rates sets the cap on interbank lending, and of course feeds back in to the treasury auction results as banks will allocate excess reserves to treasuries if they are paying substantially more than the interbank/fed IOER rates
yep agreed, I really appreciate your posts and write ups. I'm like 5% through superimperialism