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Wait, this is exactly backwards. The Fed explicitly controls interest rates because they control the supply of money. It's that simple. They do this by setting
by dxhdr 11y ago
Wait, this is exactly backwards. The Fed explicitly controls interest rates because they control the supply of money. It's that simple. They do this by setting the federal funds rate, open market operations (direct bond purchases), and so on.
- Hermel 11y agoThey control nominal interest rates, but not real interest rates. In a world without real growth, you won't get significant real interest rates regardless of money supply.
- deleted 11y ago[deleted]
- deleted 11y ago[deleted]