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To: Pelham
The Fed is now prohibited from purchasing bonds and bills directly from the Treasury, a practice which "monetizes the debt". The Fed can still purchase Treasury paper but has to buy them in the secondary market.

That rivals the Democrats' statement that "Jack Abrahamoff didn't give us money from the tribes, he told the tribes to give the money to us" for the textbook entry for "a distinction without a difference".

14 posted on 03/16/2006 4:26:59 PM PST by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: jiggyboy
That rivals the Democrats' statement that "Jack Abrahamoff didn't give us money from the tribes, he told the tribes to give the money to us" for the textbook entry for "a distinction without a difference".

You'll need to take your complaint to the Fed, that explanation was in a policy paper I read that came from them. I don't presume to be as knowledgeable as their economists. Perhaps your criticism is valid, I'm not in a position to say.

If I recall their reasoning, purchasing directly from the Treasury resulted in an artificially low interest rate. Waiting for the public to absorb the Treasury issue allowed the interest rate to reflect actual demand. Purchasing in the secondary market doesn't short circuit the interest rate mechanism.

15 posted on 03/16/2006 4:45:33 PM PST by Pelham ("Borders? We don' need no stinking borders!")
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