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To: kapkan4u who wrote (166885)	6/22/2002 7:52:27 PM
From: John F. Dowd	Read Replies (1) \| Respond to of 186894

kap: Right. As Duke said his job, if there really is one, is to watch over the integrity of the National Association of banks and to protect the currency and monitor inflation and adjust money supply in accordance therewith. He has no mandate/charter to manage the economy or the markets. You guys are a laugh you think I had something bad about Mother Theresa - was he related to her?. I think not.JFD

To: kapkan4u who wrote (166885)	6/23/2002 2:01:30 AM
From: Jim McMannis	Respond to of 186894

RE:"Imagine the Fed attempting to prop-up the stock prices growing in double digits indefinitely. Why is it less absurd for the Fed to try to prop-up the economic growth?" The purpose of the fed is to temper any deflation/inflation cycle. In our case, it's based om Keynesian (John Maynard Keynes) economic model. The Fed is supposed to increase the money supply during economic downturns and decrease money supply during upturns. The most effective way to do this is through buying and selling treasury securities in the open market. The fed also can manipulate the federal funds rate (rates member banks use to loan to each other) and the discount rate (rate member banks pay to borrow from the federal reserve board). The fed can also manipulate the reserve rate/ratio (what banks have to have on hand vs what they can loan) also this would be a last resort type of move. Sounds easy...what went wrong? 1. Y2k bubble. Momemtum...Well AG saw this coming and tried like heck to slow it down buy using successive rate hikes. I one one saw it and if anyone remembers thought he was even slow doing it. As it turned out, it really didn't matter...the bubble was due to form and burst. 2. Real Estate tax cut. For anyone that doesn't know by now, tax cuts are inflationary. Money moves. WHile everyone was preoccupied with the stock market and AG had rates going up...it was in check. But the stock market faltered and rates dropped like a rock...What was there to make the next bubble? You guessed it...Real Estate. So, AG was thrown two major curve balls...the Y2k phenomenon and the real estate tax cut. Now he's even got one working against the other. Is it any wonder he seems to have lost control? After all the bubbles have finished bursting we will may even resume a more sensical economic model. On the other hand, AG will be blamed by some because he didn't prevent all this bubble in the first place, which is what he's supposed to do...but couldn't because of.... Jim