Ellen Frank wrote:
Doug writes:
>Dunno, but there's a piece in the current Fortune claiming that Alan
>G. really really wants the stock mania to stop, so rates may rise
>more and more quickly than anyone ever knew. Hard to tell whether
>this is well-leaked or just the reporter's speculation thoug
Ellen Frank wrote:
... rentiers hoarding funds and businesses looking
to expand.
I don't remember this bit. Why would rentiers
want to hoard?
--
Barnet Wagman
email: [EMAIL PROTECTED]
Ellen Frank wrote:
>Hey Doug - You know, I just don't beleive this stuff about
>the stock market. I mean, if the Fed wanted to burst the
>stock bubble, why not raise margin requirements? Why
>pussy-foot around with 1/4 point rate increases that
>the market keeps discounting in advance? There's
Doug writes:
>Dunno, but there's a piece in the current Fortune claiming that Alan
>G. really really wants the stock mania to stop, so rates may rise
>more and more quickly than anyone ever knew. Hard to tell whether
>this is well-leaked or just the reporter's speculation though.
>
Hey Doug - Y
Tom - I think I have miscontrued what you meant by
"loanable funds" theory (I've forgotten so much
economic theory, mostly deliberately). By loanable
funds theory you mean the old savings and
investment story, where there's a pool of savings
provided by consumers and borrowed by firms
and gover
Jim Devine wrote:
>
> is this a lot or a little? Tom, I must admit I find your comments on this
> issue to be a bit obscure.
>
Sorry. I prefer to think that it's the issues that are obscure, but maybe
it's just me. $220 billion is a lot. For example, as an alternative to
loanable funds theory
Ellen Frank wrote:
>
>
> ...aren't these
> market connected via the responses of financial
> players?
I should hope so. Isn't everything connected to everything else in an
advanced capitalist economy? But the point of theory is to abstract from
some connections in order to emphasize others as
Hi Ellen,
It's me that's dense for not being clear that I'm not defending Operation
Twist. I'm just saying that it provides the best historical precedent for
current monetary policy.
That there is no market for loanable funds does not fly in the face of the
evidence, just in the face of the hun
At 11:34 PM 3/21/00 -0800, you wrote:
>Jim Devine wrote:
> >
> > The Fed is driving up (and tomorrow probably will drive up) short rates
> > while the Treasury is driving down long rates. However, as Ellen notes,
> > there are real limits to this.
>
>The Treasury probably has $220 billion to spend
Yes, I understand that central banks prefer to operate in
bills and that this means the short market is subject to
different forces. But what I'm asking is, aren't these
market connected via the responses of financial
players? Right now, for example, a 6-month commercial
bill is paying nearly
Forgive me for being a bit dense. I haven't kept up
with this literature, but the idea that there is no market for
loanable funds seems to fly in the face of the evidence.
I mean someone issued all those corporate bonds and
took out all those C&I loans, right? There is, I know, a
lot of ev
Michael Perelman wrote:
>
> The magical yield curve supposedly indicates the type of pressures that are
> building up in the economy. Operation Twist was supposed to manipulate the
> environment.
>
Like fiscal surpluses to spend?
Jim Devine wrote:
>
> The Fed is driving up (and tomorrow probably will drive up) short rates
> while the Treasury is driving down long rates. However, as Ellen notes,
> there are real limits to this.
The Treasury probably has $220 billion to spend on long bonds between now
and November.
Michael Perelman wrote:
>
> As I recall the explanation, long-term capital investment depends upon
> long-term rates, while short-term consumption is affected by short-term
> rates. In fact, of course, investment is pretty insensitive to interest
> rates.
>
The argument has less to do with shor
Ellen Frank wrote:
>
> I've never understood the reasoning behind operation twist.
> Although a drop in long-rates would make it cheaper to
> borrow and stimulate real spending, a rise in short rates,
> it seems, would make lenders less willing lend long and finance
> real investment. The reason
I wrote:
> > That means that the long rate can only fall relative to the current
> short rate if expected short-term rates are falling. That is, the long
> rate can fall relative to the federal funds rate only if people expect
> the Fed to loosen up in the future (increasing the supply of funds
>. That means that the long rate can only fall relative to the
>current short rate if expected short-term rates are falling. That is, the
>long rate can fall relative to the federal funds rate only if people
>expect
>the Fed to loosen up in the future (increasing the supply of funds) or
>the
>
The magical yield curve supposedly indicates the type of pressures that are
building up in the economy. Operation Twist was supposed to manipulate the
environment.
Doug Henwood wrote:
> Michael Perelman wrote:
>
> >As I recall the explanation, long-term capital investment depends upon
> >long-t
Michael Perelman wrote:
>As I recall the explanation, long-term capital investment depends upon
>long-term rates, while short-term consumption is affected by short-term
>rates. In fact, of course, investment is pretty insensitive to interest
>rates.
Was this before the yield curve was seen as a
The Fed is driving up (and tomorrow probably will drive up) short rates
while the Treasury is driving down long rates. However, as Ellen notes,
there are real limits to this. The banks profited mightily from high long
rates and low short rates in the early nineties (allowing them to escape
the
As I recall the explanation, long-term capital investment depends upon
long-term rates, while short-term consumption is affected by short-term
rates. In fact, of course, investment is pretty insensitive to interest
rates.
Ellen Frank wrote:
> >
> >I don't know Jim, what do you think? Was it th
>
>I don't know Jim, what do you think? Was it the purchase of long-term
>bonds that failed to put downward pressure on their yields, the sale of
>short-term bonds that failed to put upward pressure on their yields, or
>both?
>
I've never understood the reasoning behind operation twist.
Although
Jim Devine wrote:
>
> didn't "Operation Twist" (the early 1960s effort to raise short rates while
> lowering long ones) fail? or did it only fail after awhile, e.g., after the
> election?
>
> Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
I don't know Jim, what do you think?
At 09:14 PM 3/19/00 -0800, you wrote:
>The Treasury has purchased $2 billion in long term government bonds in the
>last month. It appears prepared to buy long bonds at an accelerating rate
>through November. And the Fed seems prepared to go along by trying to
>protect the dollar from the Treasur
Barnet Wagman wrote:
>
> Operation Twist? What does that refer to?
During the Kennedy Administration, the Treasury and the Fed tried to
"twist" the yield curve, or "invert" it as we say today, by purchasing long
bonds and selling short ones. The idea was to stimulate domestic aggregate
demand
Operation Twist? What does that refer to?
Edwin Dickens wrote:
The Treasury has purchased $2 billion in long term
government bonds in the
last month. It appears prepared to buy long bonds at an accelerating
rate
through November. And the Fed seems prepared to go along by trying
to
protect the
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