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To: Tommaso who wrote (233820)	4/6/2003 2:08:57 PM
From: Gersh Avery	Respond to of 436258

I used to believe .. then the NDX fell 80% ..

To: Tommaso who wrote (233820)	4/6/2003 7:41:22 PM
From: UnBelievable	Read Replies (1) \| Respond to of 436258

It Difficult For Me To Understand How You Can Say That When the Federal Reserve on its own web site says that they work with their "primary dealers" to stabilize the markets. Furthermore the Federal Reserve has acknowledged that if direct intervention was necessary (without acknowledging whether it ever has been necessary) they would consider it appropriate for them to do so (direct intervention is when the Fed buys stocks or other derivatives). No one ever said that these efforts can prevent the market from ever going down or are without cost or consequences. While it would be possible for the Fed to do so it would require them accept such consequences as rampant inflation, devaluation of the dollar, as well as significant reductions in the incentive to accumulate capital and as a consequence a reduction in real capital. Whether it is right or wrong for them to do so is a different question. No one is in favor of chaotic financial markets so what is wrong with them trying to keep the markets stable? The problem is that one man's stability is another man's chaos. Any decision to intervene in the markets results in (or probably more accurately, prevents) a redistribution of wealth. Further once their willingness to do so is understood it causes people to act in anticipation of there doing so. Is it right to have a more "orderly" bear market for 8 or 10 years or a less orderly but also less protracted correction? The bubble and its bursting were the consequence of the Fed preventing any contraction over the prior 20 years. Is it better to have 20 uninterrupted years of growth and the 15 uninterrupted years of contraction rather than more periodic but less severe swings? I expect that the man who becomes President after Busch is going to have a very different perspective on that from the man who was President before him.