What Would Be Wrong with Targetting the 10-Year Nominal Treasury Bond @ 4%/Year?
Suppose we tried monetary policy to move the IS curve:
Announce that we will buy bonds for cash all along the yield and risk curve when the 10-Year nominal Treasury rate was less than 4%/year and keep doing so until it hit 4%/year; announce that we will sell bonds for cash all along the yield and risk curve when the 10-Year nominal Treasury rate was more than 4%/year and keep doing so until it hit 4%/year.
Why wouldn't that be an absolutely fine monetary policy? Wouldn't that be a much better than the one we are following now, wouldn't it?
Wouldn't it?
Well?
Anybody?
Anybody?
Bueller?
