I don't know what the current policy is, but the Fed certainly has intervened in the past at different points of the yield curve. What comes to my mind is the famous "twist" policy during the Kennedy administration when for some period of time the Fed was selling short term securities to raise short term rates in an effort to support the dollar against speculative attacks while buying long term securities to push down longer term rates in order to spur investment and growth. Barkley Rosser -----Original Message----- From: Brad De Long <delong at econ.Berkeley.EDU> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Monday, May 17, 1999 7:56 PM Subject: Re: The Bubblemeister panicking?
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>>In response, it appears that the Fed has been making coupon passes
>>(outright buying of Treasuries, essentially printing of money) at an
>>unprecedented rate: ten since 4/19, including two today for a total of
>>$1.6 billion. A couple of questions:
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>I have never understood how the Fed decides where on the yield curve to
>intervene--whether to limit its purchases to the short-term Treasury bills
>that are near perfect substitutes for the Federal Funds that it says it is
>watching, or to buy and sell longer maturities...
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>Brad DeLong
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