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To: limtex who wrote (19084)	2/12/2001 1:49:54 PM
From: hueyone	Read Replies (2) \| Respond to of 60323

Limtex, Even though the Fed may have over tightened in '99 and '00 (imho), I respect Mr. G more than I respect any politician---Democrat or Rebublican. When the Fed makes changes in the interest rates, they are targeting where they think the economy will be six months out. The full impact of interest rate changes generally is not distributed through the economy until six months after the change. Can you imagine having to accurately predict whether the economy will be six months out and whether it will need a stimulus or tightening at that time? As I said before, this is as much an art as it is science. On balance, it certainly appears that Mr. G has done a wonderful job. Apparently both Republican and Democrat administrations agree and that is why Mr. G stays on the job across multiple administrations. You can thank Mr. G for a ten year run in the economy without major inflation or a major recession. Those on SI who deride Mr. G as a stupid, old, out of touch, irresponsible, or conspiratorial fuddy duddy only serve to lessen their own credibility in the process (imho). Best, Huey

To: limtex who wrote (19084)	2/12/2001 2:14:50 PM
From: Robert Douglas	Respond to of 60323

It was Mr G again at that time who increased interest rates in 0.5% increments which in a sort space of time brought the market to the brink of collapse. Let's see, the Fed funds rate was over 11% in 1984 and by autumn 1986 it was 6%, having begun the year around 8 1/2%. By the fateful October a year later, the funds rate had risen to the extraordinary rate of 7%. And how did this precipitate the crash of that year? Why did a rise from 6% to 7% cause a financial panic when rates much higher than that hadn't during 84,85 and most of 86? And why was the market able to make a substantial recovery the following years with a funds rate above that which supposedly triggered the crisis?