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

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To: Roads End who wrote (206117)11/21/2002 6:03:41 PM
From: Moominoid  Read Replies (1) of 436258
 
What Bernanke is saying in effect (very unclearly) is that the Fed directly controls short term interest rates and buy buying longer term bonds they could drive the interest rate on them too to zero...

Just wondering what happens when all interest rates are zero?

Why would you accept zero interest money for long bonds anyway?

This is the classic Keynesian liquidity trap.

Moomin
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