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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 457.82+1.3%Jan 23 4:00 PM EST
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To: Elroy Jetson who wrote (107669)9/21/2014 12:31:19 PM
From: bruiser98  Read Replies (2) of 219724
 
Excerpt from

Understanding the Modern Monetary System (page 19)

>>>>>
It’s important to note that the Federal Reserve could, in theory, control the entire yield curve of
government debt. As the monopoly supplier of reserves there is nothing stopping the Fed from
pegging the long end of the US government bond yield just as it pegs the overnight Fed Funds
Rate. That is, if they wanted to pin long rates at 0% there is nothing stopping them from
achieving this aside from political and public backlash. In this regard, it’s important to
understand that the Fed only allows the marketplace to control long rates on US Government
Bonds to the degree that the Fed permits. In this regard the term “don’t fight the Fed” is most
appropriate since the Federal Reserve can always set the price of the instruments it buys. This of
course does not apply to the entire spectrum of financial system assets since the Fed is only
permitted to purchase government guaranteed assets.

<<<<

papers.ssrn.com

It's an interesting paper from the Pragmatic Capitalism website.

pragcap.com

My perception has been that in the early 1980's "Bond Vigilantes" forced interest rates higher than the FED desired. The truth must be that the FED wanted rates to go higher.
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