Re: moore on term structure

[Warren Mosler <mosler@xxxxxxxx>]

>



> ------------
> Are you implying that the Fed can control long term Treasury
> rates (in a market totaling about $700 billion) at any desired
> set point

Yes.


> simply by utilizing its power to enhance or dry up the
> money supply?

?  By offering to make a market- having a bid and an offer- for thedesired
security it wishes to stabilize.  There are no real money
supply implications.  Net purchases or sales would automatically
be offset by open market operations, etc, to support the desired
overnight rate.  Not that it matters, but the same securities purchased
could be used as collateral for the offsetting repos.




>  If so, would not the consequences  be potentially
> so extreme as to render the whole concept academic?
>

Not necessarily.


> William F. Hummel



--
Warren Mosler
Director of Economic Analysis
III Finance

http://www.warrenmosler.com