Re: Mosler seminar/treasuries/zero bid

[paul davidson <pdavidson@xxxxxxx>]

At 03:00 PM 3/7/97 -0500,Greg 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-...
>
>To my surprise, he answered that it might be preferable to
>allow zero bid to occur.  This led to a very intersting discussion
>about the Fed's management role which I can't repeat today.  But
>I think it is useful to point out that the "must" in this sentence
>is more reflective of a notion that "this is deeply rooted
>practice" rather than "a necessity without which the banking
>system would collapse."

in the Mosler paper to be published in the JPKE -- the fed must prevent a
zero bid if it is to keep to its targetted interest rate.
Paul Davidson
Holly Chair of Excellence in Political Economy
University of Tennessee
523 SMC, Knoxville, Tennessee 27996-0550
fax # 423-974-1686; phone # 423-974-4221
email: pdavidson@xxxxxxx