Re: Can the Fed set the long-rate?

[Doug Henwood <dhenwood@xxxxxxxxx>]

Randy Wray wrote:

>doug
>the fed wanted to try to "fine tune" the economy thru countercyclical
>interest rate adjustments, thus, abandoned the "peg".

Ok, let me be more explicit then. A Marxian view of central banks is that
they're ruling class institutions - ones capable of taking a much longer
view than market participants, but still responsive to r.c. preferences. In
this case, the r.c. didn't want the Fed to keep long rates "artificially"
low. Many PKs seem not to share this class analysis, apparently believing
that the central bankers are simply in the grip of bad axioms. But not
wanting to attribute anything to anyone, I want to hear Paul and others
offer their explanation of why the Fed abandoned the peg.

Doug