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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ahhaha who wrote (82590)3/20/2001 11:43:46 AM
From: LLCF  Read Replies (1) of 436258
 
<<but deflationary depressions are not amenable to intervention by central bankers anyway>>.

<You are making the demand management school's error by assuming that interest rates are rigidly inverse to money supply.>

How so?? It looks like the opposite could be inferred.

<<note that the Fed AGAIN didn't raise margin requirements in the 90's boom, presumably out of fear that it might actually precipitate a crash and be blamed for it>>.

< Margin wasn't that big of an issue in comparison to '29. Institutions dominate our markets and they don't use margin in the way the public did in the '20s>

Interesting comparison w/ '29 vs now and the institutionalization of the market.... however there are a couple points I'd make: 1.) The spikes in the frothiest of the .com and biotech stocks were augmented by leveraged day traders.. these moves were also among the most publicized [another issue] and attracted further investment in those sectors, including by institutions. 2.) Institutions like Merrill Lynch agressively advertised loans against stock portfolios.

<This is your presumption and it's wrong.>

Margin numbers support the contention that it is indeed an issue even if not like it was in '29, so do you have a speculation as to why margin rates weren't raised?

<<but the Fed made the mistake to fight it, by leaving monetary policy too loose for too long following the '21/'22 recession>>.

<You imply you are non-interventionist and yet you think intervention is right.>

Again, it appears you're agreeing... the fed keeping rates artificially low is interventionist, not letting them rise with increased demand/supply.

Buttinski, DAK
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