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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: ild who wrote (2614)6/24/2003 12:17:12 PM
From: Perspective   of 4912
 
<Then there's the question of what Fed officials call the "exit strategy." The Fed got rid of the wartime 2.5% ceiling in 1951 only after a fierce battle with the Treasury, for which the ceiling held down borrowing costs. All these problems mean that while the Fed may still buy bonds, it is not likely as a stand-alone strategy.>

Also, our currency was strong, and our economy a substantial net exporter and saver at that point in time. You can afford to do a little monetizing of debt under that scenario. Given our present debtor and yawning current account deficit, I think monetizing debt would simply crush the currency. Fine for US exporters, but it would damage the global economy and strangle US standards of living that depend heavily on imports.

BC
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