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To: Oblivious who wrote (88569)	9/8/2007 11:04:41 PM
From: GraceZ	Respond to of 306849

Maybe that's what you meant but basically I read it as, "The Fed should set the rate where the short term rate has already gone." This is not the same as letting the free market set the rate. The reason is that there is no free market for money, the Fed has the rate hostage. In this regime, the short term rate follows where the various players think the Fed might move next. Everyone is guessing what the Fed might do. How can you have a free market when the short term market for money is so heavily influenced by a bunch of guys trying to out guess what the Fed will do next with rates?