Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: Rob S. who wrote (26473)	3/8/2001 11:13:45 AM
From: Oeconomicus	Read Replies (1) \| Respond to of 27307

Good post, Rob. I'm getting tired of the blame game. AG didn't tell people to buy YHOO at 250. Bob

To: Rob S. who wrote (26473)	3/8/2001 11:51:22 AM
From: 10K a day	Read Replies (1) \| Respond to of 27307

I found the new CEO! Member 1607025

To: Rob S. who wrote (26473)	3/8/2001 11:59:24 AM
From: FR1	Read Replies (3) \| Respond to of 27307

An interesting point and one worth a short discussion. It seems to me that there are two points of view as to what the FED's duty is: The more-or-less free market people: They say that the FED should allow the market to sort things out itself. The FED should only intervene if there is a extreme emergency. Inflation way out of control. War. The wholesale collapse of international financial systems. Stuff like that. The FED should park interest rates in some neutral place, like 4%-5% and do nothing unless there is a emergency. The managed economy people: These people (includes the current FED) do not believe a more-or-less market economy could ever work. They feel the FED should constantly inject themselves in the economy based not on an emergency call but simply on whatever philosophy they happen to have at the time. If they think that maybe sometime down the road there would be danger, go ahead and raise rates. Their rational is that we are always looking at lagging indicators and if you wait to see the proof things will be way out of control. Therefore it is better to guess at what is going to happen and be proactive. An example to consider: People in favor of the managed economy feel the FED did the right thing last year because a "internet bubble" was forming. The argument against this has three parts: (1) If you accept this, it means that whatever "bubble" or other theories FED members may dream up in the future is ok grounds for putting us through this whole process again. (2) The market does take care of itself even if many people don't believe it. "Bubbles" deflate all by themselves. That's how the market works. Look at AMZN - poster child for the internet. Before the FED got interest up over 6% AMZN went through its complete cycle: AMZN came out; AMZN a good story; the stock went up 1,200% in a year or so; people waited and waited for the results; the results never came; people sold off the stock and it went down and flattened out in price. Investors had plenty of time to get in and out of the stock. The same thing would have happened to all the other "story" stocks. (3) When you decide to raise interest rates real high and hold them there until you "crush the speculation" you also mess up the entire economy. IPOs become non-esistent overnight. Large companies who have borrowing and spending plans laid out for the future have the plans destroyed in a very short time and they are left holding big debts. Montgomery Wards, and people like them, are not internet bubbles - Wards bankrupted and put 36,000 out of work plus hurt all the businesses that service their 230+ stores. The examples are countless. You basically screw up our whole economy for a academic theory. IMHO, the FED should only be allowed to act when there is an extreme emergency. Extreme emergencies occur maybe once every 15-20 years. The collaspe of Russia was perhaps the only instance in the last decade or so. This whole discussion is academic because the FED has dictatorial powers (what an irony) and can do whatever they wish. I don't think our model bodes well for the future. At some point in the future the FED will put us through one of these cycles and Europe or China will step in and take over. When your family or business is at stake you will go where there is stability and growth. Money will fee and not come back.