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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Lhn5 who wrote (21867)	9/7/2012 3:08:31 PM
From: ahhaha	Respond to of 24758

Is the sterilization mostly the CBs selling short term to buy long term bonds? Depends. Most sterilization takes place in the shortest, near money vehicles which can't be called bonds. It's quite a mystery as to who is buying all this bill like money and then rolling it over. If so what about when their supply of short term bonds runs out? ? Sterilization means to sell short term near money when buying a note, or bond. This has a neutral effect on money supply. Problem is, money isn't defined now. Money supply doesn't matter. I referred to that as "Friedman illusion". Sometimes money matters, but it has to be well defined then, and then others times, money doesn't matter. Sometimes when money doesn't matter it's well defined and sometimes, not. What Friedman never incorporated in his money thesis was the fiscal side. He was schooled as a U of Chicago Keynesian. Everyone was, except the Austrians. What exactly is "near term money"? It's the repo rate that takes place covertly between private banks and FED, for example. Currently, the rate runs at about 75 BP. You can't find any formal discussion about it. This special repo paper has replaced the Tbill as the liquid transaction intermediary and it was done to keep public money transactions out of monetary policy affairs. I rarely discuss this secret form of money.