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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (78417)	3/10/2001 6:49:56 PM
From: FR1	Read Replies (1) \| Respond to of 436258

no one at the Fed -- not even its illustrious chairman -- is capable of managing a large and complex economy... The operative word is "managing". The duty of the FED should be to do nothing and only act in the case of a extreme emergency. Maybe a war or total collapse of economic systems. IMHO The primary fault lies with congress. It is the duty of congress to impress on the FED that the FED should not interfere with the economy except in cases of extreme emergency where there is a clear and present danger. Since congress says nothing and the FED has nothing to prevent them from tweaking the economy, we are going to get a constant dose of "proactive strikes" against the phantom enemy. Professors do not live for money. They live to have their economic theories proved correct. If you take no action you are a nobody professor and your theories are worthless. If you are constantly pushing buttons, you are on the cover of Time magazine and you can always claim your theories have been proven right (especially if you never articulate a theory).

To: stockman_scott who wrote (78417)	3/10/2001 10:43:26 PM
From: ahhaha	Respond to of 436258

"First, the Fed was raising rates to fight inflation, which did not exist and now it is lowering rates to fight a recession, which we feel does not exist,'' says Penny Russell, economist at H. C. Wainwright & Co., Economics Inc. False. The FED agrees with her mostly. They raised rates to slow factor inputs into GNP which were growing more and more tenuous. While the Fed was raising interest rates to a 10-year high between 1999 and 2000, the Consumer Price Index, which tracks inflation at the retail level, edged up less than 1.5 percentage points and the core rate that excludes volatile food and energy prices went up even less. A little inflation like a little drink never hurt anyone. Greenspan's tight money policy succeeded too well as the economy's growth has nearly stalled. There was no tight monetary policy. That is still forward. How can you have excess reserves running at $1 billion and have "tight money". Smart move? No, says Russell, dismissing the Fed's assurance that it can figure out to the nth degree when the economy is facing a killer problem, like a recession. Well, if FED can't figure it out, how can she decide that they are wrong in their action? "So it would appear,'' says Russell. ``But the truth is that no one at the Fed -- not even its illustrious chairman -- is capable of managing a large and complex economy like the U.S. or of knowing just when to raise and when to lower interest rates to keep growth within a predesignated range." ... Russell favors benign neglect and monetary neutrality rather than the Fed's jockeying, which she says destabilizes both the economy and stock market. "Now, if the Fed could be persuaded to leave rates alone and let all the ripples die out, there is no reason that the economy could not get back on the fast track," she says. "Noninterference would be even more stimulative than a tax cut." ... Russell says that if interest rates had been left alone in 1999-2000, the economy would have slowed down by itself, "gently not abruptly and we would have been enjoying higher growth than we are now." You have to give her credit for this novel view which is totally unacceptable to the smart guy in the glass and steel tower who controls everything an who is asserted to be by all true Americans as behind every conspiracy, even the Kuhn-Loeb International Banking Conspiracy. She is implying that we let the free market decide? Yeegads. Markets can't decide anything. Just ask Galbraith. Russell says that the Fed chairman raised interest rates in 1999 and 2000 because he saw inflation ghosts, then he cut rates in January simply out of "fear of fear itself." You don't hear me complaining about AG's move. That's the proper function of the FED. Also, where was she in '97 and '98 when it was important to come forward and make the claims she is now? She's locking the barn doors, but the horses have escaped. The fear society of the East Coast and it is far more left than the Quiche eaters, will never relinquish the prestige of "socking it to 'em".