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To: oldirtybastard who wrote (62812)	1/29/2001 9:16:23 PM
From: Mark Adams	Read Replies (3) \| Respond to of 436258

Yes, but will Disney shutting down go.com shut down SI? Off with [t]her head, she exclaimed! An interesting thing at the St Louis Fed: The Relationship Between the Federal Funds Rate and the Fed's Federal Funds Rate Target: Is It Open Market or Open Mouth Operations? by — Daniel L. Thornton stls.frb.org Pg 21 If neither open market operations nor open mouth operations account for the close relationship between the federal fund rate and the funds rate target, what can? One possibility comes from looking at the relationship the other way around. Specifically, it could be that the target changes follow changes in market interest rates. Given the extent to which both the Fed and the market has focused on the Fed’s target for the federal funds rate in recent years, some might think it folly to even consider such a possibility, but the idea is hardly revolutionary. Indeed, it is the maintained hypothesis ... [of] Goodfriend [who] puts it, “…it should not be said that a Federal funds rate target change causes a change in market rates since the Fed is merely reacting to events in much the same way as the private sector does. More generally, to the extent that we believe the Fed reacts purposefully to economic events, we should not say that funds rate target changes are ever the fundamental cause of market rate changes, since both are driven by more fundamental shocks. Of course, such shocks may originate either in the private sector or the Fed, the latter as policy mistakes or shifts in political pressure on the Fed.” Now, if repos have little to nothing to do with the Fed Funds rate in the real world, do we need to re-examine assumptions? nah...

To: oldirtybastard who wrote (62812)	1/29/2001 9:27:05 PM
From: Mark Adams	Read Replies (1) \| Respond to of 436258

I tend to agree, that it's unlikely models that can account for extraordinary changes (like natural gas price rising 4x) adequetly. There's just to many inter-relations and potential out of the blue things. Thus, the financial system is chaotic in nature. A butterfly flaps it's wings in finland, and 17,000 workers are layed of in New Jersey. The value of exchanged points of view made possible by the collection of diverse minds, such as SI, cannot be underestimated. We don't have good access to things like payroll tax withholding on a monthly or weekly basis- which could give better understanding of true economic activity, or tax receipts from estimated tax payments. Some of that data may be available from the CBO, but I haven't looked and don't know how current such data could be. But the fed could like have that updated nearly instantaneously on war room style screen. So you could say we are better off in that we can collect ancedotal evidence, and build that into our mental models, but we can't truly assess the magnitude of many of the events. I mean, what's the impact of 10billion writeoff in a trillion dollar economy? <g- it's a biggie if you ask me> That the majority of our fine citizens are in effect wearing blinders is quite true, IMO. At least they can sleep at night <g>. This is where the 'group' brain has an advantage- we can recogonize and build in events the masses may not ever hear about. I see the lack of informed consent to the financial rape of the masses (oh, those are probably too strong of terms) as being due to the poor quality of info delivery on the part of the media (most of america hears only the major market averages) and the fact that it's very difficult for many people to assimilate the huge amount of info available.