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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 689.53

-0.8%

Feb 3 4:00 PM EST

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To: jttmab who wrote (35747)	12/22/1999 12:30:00 PM
From: Casaubon	Read Replies (1) of 99985

Fundamentally, I don't think this is a true statement hmmmmmmm. I thought the Fed was the institution which had engineered the credit expansion; the well spring from which all credit arose. I had thought that is what the expansion of the money supply implied. But as a hypothetical. Suppose the fed didn't set interest rates between it's member banks. What would you expect to happen? [Serious question, and I have no idea what the correct answer would be.] Since, im my opinion, the Fed has set very permissive standards, the interest rates would rise, as lenders would tend to be more conservative on the risk they take. Fewer loans would occur, so interest rates would not neccessarily rise dramatically, as lenders would evaluate business models more slectively. The Fed has created on environment where essentially any business can try to fail <ggg>.

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