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To: UnBelievable who wrote (234208)	4/8/2003 9:20:27 AM
From: GraceZ	Respond to of 436258

I know how the Fed operates. Large movements in the securities markets create demand for funds. Think about why this is so. What the Fed does is manage the market for money so that liquidity needs of the member banks are met every single day. What they attempt to do is to match the money supply to the instantaneous demand and make sure that the money supply itself doesn't create market disruptions. What they use the RPs for is to maintain the target interest rate. If you want to fault the Fed, fault them for this. Why is it we have a free market in everything except money? No one knows what the price of money should be because they've been setting it for so long there is no market clearing mechanism for setting short interest rates. Because they closely watch the securities markets does not by any means mean that they attempt to move them in one direction or another on a daily basis.