can anyone even prove that with no Fed at all, we wouldve had a lower Y2K peak, a more stable correction following that peak in 2000, and a smoother resumption of growth in 2001 ???
"Proof" is impossible.
However you can get some idea of how it would have gone.
Let's take the poster child of the internet, AMZN:
1) Before the FED got to raising rates up to 6% or so, AMZN went through its whole cycle:
2) It came out and had a great story.
3) People bought like crazy and it went up 1,200% in a year.
4) People eventually got tired of waiting to see the path to profitability so they sold it off. It went down and leveled off.
5) So the market behaved exactly the way it was suppose to behave - giving lots of capital to a new idea and taking some capital away if the idea does not work.
People had plenty of time to get in and out of AMZN. The same thing would have happened to many of the other story stocks in 2000. So 2000 would have seen many of them sell off. However, you probably would have seen the warning signs and had plenty of time to get out. Most important, other stocks would not have been damaged. The IPO market would still be there, the semis would have continued to do well, etc.
The terrible thing about what the FED did is that they damaged the entire market. Choking funds off instantly destroyed the IPO market and crushed many large businesses that were not the target. It was like taking a sledge hammer to try and kill a fly - you destroy tons of stuff besides the fly.
Anyhow, it is history and nothing we can do.
More important, and most amazing, is that nothing will be done. Have you heard any calls for congress to do anything?
You never will.
We will repeat in a few years. |
