Let the Fed Do Its Job on Wall Street
I take exception to the article ``Stop Bond Market Mandarins From Running US Economy,'' Nov. 8. As a banker of more than 40 years, now retired, I have dealt with the bond market hundreds of times in the placement of funds for investment. This is a very competitive market.
When the economy is growing, the demand for credit grows, as it is doing at the present time. The stock market competes for these funds, and investors choose among the bond market, the equities market, and other income-yielding investments.
The demand for available funds pushes the cost of money up. I find it hard to believe that, as asserted, 39 local bond dealers can set the price of money. Although at the present time the Federal Reserve Board's actions in raising interest rates appear to be running behind the yield curve, the goal is to curb inflation by slowing business expansion. The perception of the rate of return necessary to effectively compete with all markets, foreign and domestic, for funding of our national debt requires careful analysis of those markets, not an arbitrary decision on the part of a few. Let the Fed, with its voluminous stacks of economic data, set interest rates. Then the bond market will pretty much stay in line. Russell E. Wright, Evergreen, Colo.
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