Word: marketed
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Dates: during 1960-1969
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...sell them at a discount to increase the effective yield without changing the historic 4¼% coupon, or 2) ask the Federal Reserve to support the Government bond market as it did prior to 1951. (In 1953 the Federal Reserve decided to buy only relatively short-term notes and bills.) Says Douglas: "The abandonment of the 'bills only' policy would add another weapon [to use] to help prevent economic fluctuations...
...House Speaker Sam Rayburn and House Ways & Means Committee Chairman Wilbur Mills. The plain fact, as they are well aware, is that a boost in Treasury long-term rates is probably the most effective way of holding overall interest rates down. By borrowing exclusively in the short-term market, which is the area where business gets its money for temporary or seasonal needs such as carrying inventories or financing sales, the Treasury has sopped up much of the money normally available. The scramble for the remainder has driven up short-term rates, eventually also forced up long-term borrowing costs...
...competitive is the short-term market that the Treasury's newest 91-day bill sells for nearly 4.6%. The effect of short-term borrowing, according to Government estimates, has been to drive overall interest rates up ½% in a year, and cost the Government an extra $700 million to carry its debt. The cost to private borrowers has run into the billions, is growing so worrisome that even housebuilders, who once opposed raising the ceiling, are now having serious second thoughts. The Treasury's medium-term "magic fives" of last fall (TIME, Oct. 12) drew some $200 million...
Administration economists are dead set against trying to sell long-term bonds by gimmicks, meaning discounts, or by trying to force the Federal Reserve to support the market. They argue that this is simply funny-money financing. By supporting Treasury bonds, the Fed would, in effect, be pumping money into the economy, would lose control over the monetary system and take the U.S. down the road to real inflation. Says FRB Chairman William McChesney Martin: "The world now knows that, as the night follows the day, inflation follows any effort to keep interest rates low through money creation...
...best argument against keeping the historic 4¼% interest ceiling is that it has not kept interest rates down. The best argument for removing the ceiling is that it will give the Treasury enough flexibility to lessen its reliance on the short-term market. By taking the pressure off these rates, the U.S. will have a good chance of stopping the rise in interest and the squeeze on money that, historically, has almost always ushered in a recession...