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

To: Jorj X Mckie who wrote (248186)	7/3/2003 5:17:41 AM
From: zonder	Read Replies (1) \| Respond to of 436258

And if you have any doubts as to whether the Fed is following an interventionist policy or not: [From today's FT - Comment & Analysis, page 11] ... unprecedent extent to which the economy is now hostage to markets. That inter-relationship is a direct result of the Fed's hyperactive approach to managing the economic cycle. The vigorous response to the bursting of the stock market bubble, involving succesive cuts in interest rates, ensured that the post-bubble recession was mild. But relative stability in the real economy has been won at the cost of economic imbalances and wobbly financial markets. Household savings remain low and the private sector balance sheet is still overburdened with debt (...) The Fed's strategy has been to offset the contractionary impact on the economy of a declining stock market by boosting the bond and housing markets. As interest rates have fallen, Americans have refinanced their homes and seized the opportunity to spend. As you can see, the Fed is not as non-interventionist as you seem to believe. The question some of us are raising here, of course, is just how wise a strategy this is - counter the deflation of one bubble by helping create others. Looks like symptomatic treatment, to continue with your disease allegory...