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To: LLCF who wrote (82742)	3/20/2001 12:33:09 PM
From: ahhaha	Read Replies (1) \| Respond to of 436258

It wasn't necessary to raise margin rates. The amount of margin incurred was no greater than any other bull phase in the last 30 years adjusted for scale. Aside from that when FED decides to constrain credit stock margin is the first to feel it. If FED hadn't targeted interest rates after the '94 tightening, there would have been no excess M2 growth. When the free market alone determines the cost of money the resulting environment instills the fear of god in borrowers and lenders. The fear is removed when FED interferes and guarantees by fixing a comfortable rate. Then the market can never properly clear and is always at disequilibrium, because it hasn't been allowed to do unconstrained price discovery. The market doesn't know what is the proper rate of interest. That's why whatever the FED decides today is entirely irrelevant.