Re: Can the Fed set the long-rate?

["michael perelman" <michael@xxxxxxxxxxxxxxxxx>]

Doug wrote:

> Paul Davidson, you often cite WW II control of the bond rate as evidence
> that it can be done in peacetime. To what do you attribute the ending of
> the wartime controls? If your policy were so reasonable, why was it
> rejected?
>
> Doug

I have some questions on the subject:

This subject is very interesting.  The policy lasted abou 6 years in
peacetime.  It worked.  It always seemed to me that political forces were
responsible for the end of the policy at the time.  Am I correct here.

Today, things seem to be more out of hand.  The relevant market is probably
the world market.  In addition, as the stock of U.S. debt gets larger, Fed
open market operations should have more difficulty in moving the market,
unless the Fed's presence grows proportionally.  Again, is my supposition
correct?

Finally, why did Paul Douglas get so enthusiastic about the Fed accord?
------
Michael Perelman
Economics Department
California State University
Chico, CA 95929
michael@xxxxxxxxxxxxxxxxx
916-898-5321
916-898-5901 fax