Re: Mosler seminar/treasuries/zero bid

[David Lloyd-Jones <dlj@xxxxxxxxxxxx>]

Gregoire de Nowell (ci-devant) wrote:
>
> Mosler reiterated recently that the govt "must" offer T-bills
> to support the interest rate.  We had a very interesting off-line
> discussion in which he clarified to me--I don't know if this is
> still his position--that the "must" is a judgment based on his
> empirical watching of what the Fed does.  I asked him about
> why the "zero bid" should be avoided at all costs.
>
> To my surprise, he answered that it might be preferable to
> allow zero bid to occur.

I'm sorry: I thought the empirical evidence was that the real historic
rate on T-bills has been zero, as close as statistical technology can
determine.  Is this wrong?

Of course that is only the interest rate to people who pay for them in
US dollars.  People who have spent, e.g., yen for them have received a
rather different real rate in some periods of interest.  :-)

                                  -dlj.