The shift to yield curve control means that money supply control must be abandoned

After its June 2020 meeting, the Federal Reserve stated that "we will continue discussion on yield curve control in further meetings". The Bank of Japan already has a 10-year interest rate target of 0% . If the norm in OECD countries becomes the control of long-term interest rates, then it should not be forgotten that this means that any money supply control will disappear. If investors decide to reduce their holdings of bonds (because growth implies that other assets are more attractive, or because inflation is rising), the central bank has to absorb all the bonds offered and not demanded by the private sector. This means that in current economies, money is gradually replacing bonds and the growing excess liquidity increasingly is giving rise to bubbles.