Why can't the fed control long rates?

Discussion in 'Economics' started by empee, Sep 28, 2007.

  1. empee



    The arguement is that the FED controls short rates and long rates are set by the markets.

    Since the FED can print as much money as it wants, why cant it buy/sell long bonds and therefore set those rates?

    (At least for short periods of time)

    Ie even if foreign money exits our bonds markets because of low yields, with the FED on the other side why couldn't they artificially keep long rates low?