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Strategies & Market Trends : ahhaha's ahs
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To: frankw1900 who wrote (10284)11/23/2007 12:04:18 PM
From: ahhahaRead Replies (2) of 24758
 
You'd let the market raise the rates, no?

As much as the American people would have chosen to fight in Iraq. It takes leadership to do what is hard. In this era Americans don't have the needed toughness to do what is hard.

As I've explained many times before there is no market for money. FED obviated it many years ago, a process that started about 1989 and was pretty much completed by 1996. The pseudo market, the market in T paper and quasi money away from FED direct influence, keys on fed funds rate which is fixed. This has gone on so long that a market can't arise until FED gets out. That won't be happening. It's too hard for puny intellects to lead in that direction.

If it did happen, the time needed to restore any semblance of a free market would require several years. Probably elimination of FED from price fixing and the arise of new free market in money would require a complete chaotic bust of the US financial system. That way a free market would arise naturally.

There's another way to bring about a change in FED policy. Install a tough chairman. If FED insists on price fixing then they have to ignore the Dual Mandate and always arbitrarily err on the side of restraint. Discourage debt creation in private sector. Even if they retain Dual Mandate they will have to raise interest rates when they can't easily do so, like now.

There is an alternative to arbitrarily err on the side of lending restraint. Fiscal policy changes. Have to lower the effective tax rate in the US across the board to 10%. That isn't possible as long as 'crats rule.
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