Re: comments on Kohn q and a

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Posted by Warren Mosler (208.49.176.241) on 17:27:11 12/01/07

In Reply to: Re: comments on Kohn q and a posted by Ed Rombach

: : COMMENTS ON Q AND A
: : THE NY FED WOULD HAVE FULL CONTROL OVER THE FED FUNDS RATE AS IT COULD KEEP THE SYSTEM MODESTLY 'NET BORROWED' WITH OPEN MARKET OPERATIONS AS IT DID PRE 2003.
:
: Warren - By net borrowed, do you mean maintaining a reserve deficit in the commercial banking sydtem?

yes, sufficient to drive at least one bank to the window. that keeps the ff bid at/very near the target and with the window open at the target rate funds won't trade any higher than that.

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Subject:	Re: comments on Kohn q and a
Comments:	: : : COMMENTS ON Q AND A : : : THE NY FED WOULD HAVE FULL CONTROL OVER THE FED FUNDS RATE AS IT COULD KEEP THE SYSTEM MODESTLY 'NET BORROWED' WITH OPEN MARKET OPERATIONS AS IT DID PRE 2003. : : : : Warren - By net borrowed, do you mean maintaining a reserve deficit in the commercial banking sydtem? : : yes, sufficient to drive at least one bank to the window. that keeps the ff bid at/very near the target and with the window open at the target rate funds won't trade any higher than that. : : : : :
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