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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: bruiser98 who wrote (107679)	9/21/2014 12:51:22 PM
From: Metacomet	Respond to of 219716

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. Seems as though the book is in need of revision...

To: bruiser98 who wrote (107679)	9/21/2014 1:59:33 PM
From: Elroy Jetson	Respond to of 219716

This statement is true. . . . the Federal Reserve could, in theory, control the entire yield curve of government debt. This does not mean the Fed has that much control over the larger debt market. One of the ironies of the banking system is the creation of new credit quickly provides deposits of the same amount of the loan, making money more available which drives down the market price of money. What was that? => Increased demand for money and credit creates a progressively lower price paid for money saved and a lower price charged for money borrowed. This is the exact opposite outcome a "free-market" believer would anticipate from the forces of supply and demand. A central bank, knowing this problem, should make money more costly as demand rises by increasing the level of required bank reserves, but Greenspan did not believe this was the role of the central bank which resulted in an unchecked credit creation machine.