> DANIEL.DAVIES at flemings.com wrote:
>
>
> Just goes to show how wrong you can be. . . . .
>
> Enrique, this can't be right. The Fed's means of control over the
> financial system is the interest rate, and they haven't lost control of
> that. The MMMFs are an *unregulated* banking system, in the sense that
> there's little or no prudential supervision of them. But that's a
> different thing.
>
> dd
But that's just one fo the tools, right? The other is the ability to regulate how much money is created through the addition/substraction of reserves, through open market operations. And in out-of-control bubbles, when people don't really care how much interest they are paying, that one is more important, isn't it?
Also, I am not sure that the ability to set interest rates in unaffected by an alternative, unregulated banking system.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique