[Prev][Next][Index][Thread]

Re: The Limits To Growth



On Tue, 17 Dec 1996 09:58:57 -0800, Max Jacobs <mjacobs@bionomics.org>
wrote:


>Ok my mistake.  But that doesnt really change anything.  The fed still
>doesnt have as much power as the original author thinks.  The foreign
>exchange markets have a turnover of $1 trillion a day.  Billions of
>dollars can go into and out of bank accounts with the press of a
>button.  Money streams in and out of economies faster than central banks
>can blink.  In other words the markets are essentially in control of
>interest rates and not the fed.

 
Max,
 
I don't think this gets it quite right.  You are of course correct
that there are huge flows of money between arbitrage accounts, but you
have to realise that the owners of the accounts are usually the same
party on both ends; they're just switching pockets.
 
There is no control going on here: they don't _fix_ the interest or
exchange rate; they are trying to _find_ it.
 
Central banks, by contrast, have large influence on both the
money/interest see-saw day-to-day and expectations over the scale of
months.
 
                                                              -dlj.


References: