The Art of the Sell Side
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The Federal Open Market Committee (FOMC) is within the Federal Reserve System, a.k.a The Fed. They are charged under United States Law with overseeing the nation's open market operations (i.e., the feds buying and selling of U.S. Treasury Securities). It is the Federal Reserve Committee that makes key decisions about interest rates and the growth of the U.S. money supply. The FOMC ordered traders at the New York Fed to buy billions of dollars of treasury securities on the open market, putting more money in circulation and lowering short term rates. The Federal Mandate of 1935, Congress shielded it from influence of the political process. The Fed reports two times per year to Congress-it controls its own purse strings by funding itself with interest income from treasury securities and other assets it holds. This frees the Feds to focus on its statutory mission: putting in place the monetary conditions needed for maximum sustainable, long-term growth and employment. Stable prices mean a sustainable economic growth. Inflationary pressures go beyond the current election cycle when the government overspends; it must borrow to balance its books. It borrows by selling treasury securities, which siphons away capital that could otherwise be invested in the private economy. See: The National Economic Commission House Banking Committee. ("The Age of Turbulence"-Adventures in a New World, Allan Greenspan, The Penguin Press, New York (2007)).
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