The Fed and the banking entities which influence it, which are CONUS and OCONUS, run the Fed.
Neither Congress nor the President meet to determine interest rates, or meet to determine the daily inner workings, and selling or purchasing of securities which the Fed is involved. Anyone who believes that is just plain dumb and naive.
Another significant strategy the Fed uses to manipulate interest rates is OMO, where the Fed determines to buy or sell Treasury bonds on the open market.
This increases or decreases available money supply and is done precisely to affect interest rates.
Again, this is another way the Fed manipulates interest rates as well as the free market, period.
This is precisely one of their well used tools to manipulate or intervene in the free market.
Are you, or anyone else you know privy to when, and to what extent they will do this. This is not something they always announce even after the do it.
And this does tie directly to M0-M4 money supply and the velocity of money.
Let me rephrase to make this more accurate -
“The Fed runs the Fed, and the banking entities which influence it, are CONUS and OCONUS.”
“Another significant strategy the Fed uses to manipulate interest rates is OMO, where the Fed determines to buy or sell Treasury bonds on the open market. This increases or decreases available money supply and is done precisely to affect interest rates.”
Of course in the 1970s this didn’t work for the Fed at all. On Thursday evenings if the money supply numbers increased the bond vigilantes sold their own bonds and drove interest rates even higher, the exact opposite of what the Fed wanted. This continued until Paul Volcker brought credit growth to a dead halt which ultimately killed the inflationary expectations of the public.
“And this does tie directly to M0-M4 money supply and the velocity of money.”
The Fed has zero control over the velocity of money. That is a factor entirely in the hands of the public at large, and our willingness to spend or hold on to our money.
Thank God.