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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Mark Adams who wrote (62729)1/29/2001 4:22:24 PM
From: GraceZ  Read Replies (4) of 436258
 
In a sense. The RPs are to defend the FF rate that the FED set. If the rate rises above the target it means that demand for funds is pushing the rate higher. Now answer me why is it that they know what the rate should be better than the market does? Putting reserves in below market actually raises marginal demand, which then puts more pressure on the rates. Notice the RPs keep getting bigger and bigger. Meanwhile where is all that money going if the economy has put on the brakes and is growing at zero?
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