Martin Mayer, The Fed, 2001
Emphasizes that your father's Fed could set bank rates and thereby control loans. Now there are so many different routes to access capital, and complicated derivatives, etc., that changes to the Federal Funds rate have much less effect.
An idea about why the large money supply increase of 1992 caused not inflation but a stock market boom is interesting:
There is an explanation at hand, especially impressive because it predates the time in question. James Tobin in the 1980s developed the "q theory of investment," neatly stated by Steven Kamin, Philip Turner, and Jozef van 't dack of the Bank for International Settlements: "With an easier monetary policy stance, equity prices may rise, increasing the market price of firms relative to the replacement cost of their capital. This will lower the effective cost of capital, as newly issued equity can command a higher price relative to the cost of real plant and equipment. Hence, even if bank loan rates react little to the policy easing, monetary policy can still affect the cost of capital and hence investment spending. Policy-induced changes in asset prices may also affect demand by altering the net worth of households and enterprises. Such changes may trigger a revision in income expectations and cause households to adjust consumption." [Greenspan's "wealth effect"]
So the secondary offerings / convertibles that appear after a stock market rise, like now, are indirect fruit of the Fed's policy to increase business investment.
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