To: Texan Tory
The money that is borrowed from China should then add to the money supply I would think, Don't confuse the Fed with the Treasury. Money that China has is already part of the money supply.
if theres not enough buyers for the bonds, raising the interest rate can attract more buyers, and it seems to me that this should also create some inflationary pressure.
Actually, raising interest rates is deflationary.
105 posted on
08/26/2009 6:20:26 AM PDT by
Toddsterpatriot
(Math is hard. Harder if you're stupid.)
To: Toddsterpatriot
if theres not enough buyers for the bonds, raising the interest rate can attract more buyers, and it seems to me that this should also create some inflationary pressure.
"Actually, raising interest rates is deflationary."
Yeah you're right about this, I got cause and effect mixed up. Inflation and high interest rates go together because inflation leads to higher interest rates, higher interest rates don't lead to inflation. I'm also rethinking my comment about the Treasury raising interest rates to attract buyers. I think the market pretty much decides what the interest should be on a 10 year note, not the Treasury.
By the way, if you and I are in some kind of debate, then I will definitely concede right now that you are winning :-).
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson