The bear market and the costly and protracted recession that began in 1981, for example, was created soley because the Federal Resevere increased the discount rate in rapid succession on Sept26,1980, Nov.17,1980, & Dec.5,1980.
Their fourth increase, on May 8,1981, thrust the rate to an all time high of 14%,which finally killed the AMerican economy, our basic industries,and the stock market. This starkly documents and demonstrates how much our federal government controls and determines our economy, not Wall Street or business as many people believe.
In the past interest rates as a rule r by far the best indicator of market direction. In the past the beginning of bear markets occured when the discount rate was increased 3 times in succession, and it usually signaled a end to the bear when the rate was finally lowered. |
